London: Global financial markets opened the final full trading week of 2025 under a cloud of caution, with renewed concerns over China’s struggling property sector sending ripples through equity, bond, and currency markets. Investors are closely watching the impact of the slowdown on broader economic growth as central banks across the world prepare to announce key policy decisions this week.
China’s property market remained the focal point of investor anxiety. Major developer China Vanke failed to secure bondholder approval to extend a payment deadline, raising fears of a potential default and intensifying concerns about the stability of the nation’s real estate sector. Official data showed that new home prices continued to fall in November, underscoring weak demand despite multiple policy interventions by Beijing aimed at reviving the market. The Chinese yuan, however, strengthened to its highest level in over a year, highlighting the uneven nature of China’s economic performance, where selective stability coexists with structural challenges.
The fallout from China’s real estate troubles was felt across global markets. Asian equities opened sharply lower, with MSCI’s Asia-Pacific index outside Japan sliding roughly 1.2%, reflecting investor caution and a move away from riskier assets. In Europe, futures suggested modest early gains, but market sentiment remained fragile as traders weighed the implications of the Chinese slowdown against upcoming central bank announcements.
This week’s central bank activity is expected to play a pivotal role in shaping investor outlook. The Bank of Japan is widely anticipated to raise its policy rate to 0.75%, signaling tightening in response to domestic inflationary pressures. In contrast, the Bank of England may consider a rate cut amid easing price pressures, while the European Central Bank, Sweden’s Riksbank, and Norway’s Norges Bank are expected to maintain current borrowing costs amid mixed economic signals. These decisions will be closely monitored for indications of global monetary policy direction as 2025 comes to a close.
In addition to policy developments, markets are awaiting critical economic data, including euro zone industrial production figures and government debt issuances in France. Analysts note that these reports, combined with China’s property woes, could influence investor confidence, particularly in risk-sensitive sectors. The convergence of these factors has left global investors navigating a landscape of heightened uncertainty as the year-end approaches.
Market observers emphasize that the coming days will be critical for shaping year-end positioning and expectations for 2026. While China’s economic slowdown continues to weigh on sentiment, central bank signals and regional data releases may offer opportunities for recalibration, making this a pivotal period for financial markets worldwide.