London: Global financial markets began the week on an uneasy footing on Monday, with investors adopting a cautious stance ahead of critical U.S. earnings announcements and the long-delayed backlog of economic data. The mood across trading floors in Asia, Europe, and early U.S. sessions reflected a blend of anticipation and anxiety, especially as markets look to Nvidia’s quarterly results as a major indicator of the sustainability of the recent AI-driven equity rally.
The broader shift in sentiment comes amid a recalibration of expectations for a December interest rate cut by the U.S. Federal Reserve. Just a week earlier, traders saw more than a 60% probability of a reduction in borrowing costs. This optimism has since faded, with the likelihood now closer to 40%, as Fed officials continue to signal a more hawkish approach. Rising Treasury yields further underscored this caution, pushing investors toward safer positions and weighing down appetite for risk-heavy assets.
In Asia, markets displayed mixed emotions but largely tilted toward weakness. Japan’s Nikkei struggled notably, dragged down by tourism and retail stocks already battered by growing diplomatic tensions between Tokyo and Beijing. Meanwhile, in Australia, markets slumped to a four-month low, after a court ruling held mining giant BHP responsible for a dam disaster in Brazil. The ruling triggered a sharp drop in BHP shares and sent ripples across the entire Australian index as investors reassessed legal and financial risks.
With global markets waiting for direction, the focus remains squarely on the upcoming earnings season. Nvidia’s results later this week are expected to offer a crucial test of investor enthusiasm surrounding artificial intelligence and semiconductor demand. Alongside Nvidia, major U.S. retailers including Walmart, Target, and Home Depot are also due to report, providing further insights into consumer resilience amid lingering inflationary pressures.
The U.S. dollar held firm on Monday, reflecting uncertainty in currency markets as traders awaited the release of critical U.S. economic reports delayed by the recent government shutdown. The backlog includes the much-anticipated nonfarm payrolls report, now scheduled for Thursday. Though some analysts believe the delay may blunt the report’s immediate impact, markets remain highly sensitive to signs of labor market strength or weakness, which could shape the Fed’s next policy move.
Safe-haven assets, normally buoyed in moments of market anxiety, showed unusual softness. Gold prices slipped, while Bitcoin recorded its steepest weekly drop since March, reflecting a broader retreat from speculative investments. Analysts say this behavior suggests a more aggressive pullback in liquidity rather than a flight to traditional safe harbors.
Japan’s economy also returned to center stage after data showed the first economic contraction in six quarters, raising fresh concerns about domestic demand and industrial output. Prime Minister Sanae Takaichi is reportedly preparing a stimulus package worth ¥17 trillion to revive growth, a move that may complicate Japan’s fiscal outlook. The yen weakened sharply against the dollar, while bond yields surged to multi-year highs, signaling growing market discomfort with Japan’s trajectory.
As the week unfolds, global markets are likely to remain sensitive to a combination of corporate results, macroeconomic indicators, and geopolitical undercurrents. With uncertainty lingering across asset classes from currencies to commodities to digital assets investors appear braced for a pivotal week that could reshape risk sentiment heading into year-end.