Asian markets opened the week lower on Monday, as investor sentiment turned cautious following weaker-than-expected Chinese retail figures and ongoing concerns around global trade policies. The MSCI Asia ex-Japan index declined by 0.7%, with Japan’s Nikkei 225 also falling 0.5%.
April data from China painted a mixed picture: while industrial production exceeded forecasts, retail sales disappointed, signalling that domestic demand remains fragile despite earlier stimulus efforts. The subdued figures are likely to reinforce market scepticism about the strength of China’s post-Covid recovery.
Adding to the pressure, the United States’ recent announcement of increased tariffs on Chinese goods has started to cast a shadow over China’s export outlook. Beijing’s muted response thus far has not reassured markets, with trade volumes expected to take a hit in the coming months.
Meanwhile, concerns over US fiscal stability resurfaced after Moody’s issued a downgrade warning on US sovereign credit, prompting a drop in the dollar and a rise in long-term Treasury yields. This shift contributed to a defensive mood in Asia, particularly in technology and export-oriented sectors.
European markets are expected to open cautiously. Focus will be on the eurozone’s final inflation figures for April and any signals from the European Central Bank regarding its interest rate path. While some policymakers have hinted at the nearing end of the rate-hiking cycle, others warn that a renewed global trade conflict could complicate monetary easing.
In the United States, stock futures pointed to a negative open, with S&P 500 contracts down over 1% in early London trade. Investors are bracing for speeches from key Federal Reserve officials, including Raphael Bostic and John Williams, which may provide clues on the central bank’s inflation outlook and rate strategy.
Additionally, Washington’s trade tensions with Canada and Mexico are drawing scrutiny, with fears of broader protectionist measures gaining ground. Any new developments could weigh on investor confidence as markets assess the likelihood of retaliatory tariffs and disrupted supply chains.
As the day progresses, attention will turn to both policy signals and macroeconomic releases. Market participants are likely to remain risk-averse unless data or central bank commentary offers a clearer path forward. Until then, volatility and cautious positioning may characterise the early part of the week.
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