Global stock markets experienced a downturn on Monday, driven by concerns over economic growth and potential monetary policy shifts. The decline was particularly pronounced in Asia, where Japan’s Nikkei 225 fell nearly 2%, reflecting investor apprehension following comments from Bank of Japan Governor Kazuo Ueda regarding a possible interest rate hike.
Japan’s central bank has maintained a benchmark interest rate of 0.5% for years as part of efforts to stimulate economic growth and combat deflation. However, with inflation consistently above its target of approximately 2%, the central bank faces a challenging decision. Ueda indicated that discussions about a rate increase will occur at the upcoming meeting on December 19, intensifying market scrutiny.
In early trading, futures for the S&P 500 and the Dow Jones Industrial Average dropped by 0.6% and 0.5%, respectively. European markets also reflected this trend, with Germany’s DAX index declining by 1% to 23,589.90 and France’s CAC 40 losing 0.5% to 8,079.94. The UK’s FTSE 100 edged down by 0.1% to 9,707.68.
The manufacturing sector in Japan is also showing signs of strain, as indicated by the S&P Global Japan Manufacturing Purchasing Managers Index (PMI), which recorded a value of 48.7 for November. Although this marks a slight improvement from 48.2 in October, it remains in contraction territory, where a reading below 50 signals a decline in activity.
“Japan’s manufacturing sector continues to grapple with weak demand conditions,” noted Annabel Fiddes, economics associate director at S&P Global Market Intelligence. The contraction in factory activity reflects broader challenges across Asia, with China’s manufacturing sector also experiencing a decline for the eighth consecutive month.
Despite these concerns, certain markets showed resilience. Hong Kong’s Hang Seng index gained 0.7% to 26,033.26, as did the Shanghai Composite index, which rose by 0.7% to 3,914.01. Conversely, South Korea’s Kospi dipped 0.2% to 3,920.37, while Australia’s S&P/ASX 200 fell 0.6% to 8,565.20. Taiwan’s Taiex lost 1%, and India’s Sensex shed 0.1%.
Reports on manufacturing activity in the region are being closely monitored, particularly in light of U.S. President Donald Trump‘s tariffs and their impact on Asian economies. Recent consumer spending during major retail events like Black Friday and Cyber Monday exceeded expectations, despite uncertainties surrounding the U.S. economy.
In the U.S., trading on Friday saw the S&P 500 rise by 0.5%, the Dow gain 0.6%, and the Nasdaq increase by 0.7%, although trading was interrupted for several hours due to a technical issue at the Chicago Mercantile Exchange.
Looking at commodities, crude oil prices surged on Monday, with U.S. benchmark crude rising by $1.14 to $59.69 per barrel. Internationally, Brent crude also gained $1.14, reaching $63.52 per barrel. The U.S. dollar weakened against the Japanese yen, moving to 155.25 from 156.14 yen, while the euro strengthened to $1.1622 from $1.1596.
In the tech sector, stocks faced volatility, with Nvidia declining 1.8% on Friday, concluding the month with significant losses. Oracle saw a steep fall of 23% in November, while Palantir Technologies dropped 16%. Notably, Alphabet experienced a surge of nearly 14% due to excitement surrounding its new AI model, Gemini.
As the Federal Reserve continues to navigate the complexities of interest rates, the latest meeting minutes highlighted potential divisions among policymakers regarding future monetary policy. With inflation on the rise and the job market showing signs of slowing, the central bank faces a difficult balancing act.
Overall, the mixed signals from global markets and economic indicators underscore a period of uncertainty, leaving investors vigilant as they assess the implications for future growth.
