Asian stock markets faced a challenging start to the week as South Korean stocks tumbled by 2.4%, driven by political uncertainty surrounding President Yoon Suk Yeol’s future. Meanwhile, China’s consumer prices unexpectedly dropped 0.6% in November, pushing annual inflation to just 0.2%, raising concerns about deflation and the need for aggressive policy measures. The geopolitical backdrop was further strained by the fall of Syrian President Bashar al-Assad’s regime, which added complexity to the Middle East situation, while muted market reactions followed the U.S. payroll data and Syria’s political developments.
Central banks are taking center stage this week, with the European Central Bank and the Swiss National Bank expected to announce significant rate cuts amid slowing inflation and economic uncertainty. Canada’s central bank is likely to ease rates following a rise in unemployment, while the Reserve Bank of Australia is predicted to maintain its current stance. In the U.S., all eyes are on the upcoming inflation data and Federal Reserve meeting, with markets pricing in a high probability of further rate cuts to support economic growth.
The global economic landscape remains fragile, as a mixed recovery in U.S. markets, continued geopolitical challenges, and fluctuating commodity prices define the outlook. Gold and oil edged higher amid cautious market sentiment, while the dollar showed resilience against major currencies. The MSCI Asia-Pacific index dipped 0.5%, highlighting a lack of investor confidence as policymakers in Beijing and beyond navigate economic turbulence and geopolitical uncertainties.