BANGKOK (AP) — Asian shares exhibited mixed performances as investors adopted a cautious stance ahead of this week’s interest rate decision by the Federal Reserve. U.S. futures and oil prices showed an upward trend, while geopolitical tensions between Japan and China pointed to caution among traders.
On Sunday, Japan and Australia called for calm following an incident involving Chinese military aircraft locking radar on Japanese fighter jets. This incident came close on the heels of a comment made by Japanese Prime Minister Sanae Takaichi regarding Taiwan, which had already heightened tensions with Beijing. Japan's Defense Minister Shinjiro Koizumi issued a formal protest, describing the episode as an "extremely regrettable" and "dangerous" act that "exceeded the scope necessary for safe aircraft operations."
The Nikkei 225 index in Tokyo remained unchanged, closing at 50,491.53. Adding to concerns, revised government data released Monday indicated that Japan’s economy contracted at an annual pace of 2.3% for the July-September period, worse than the previously reported 1.8% rate. The decline was attributed to the adverse effects of U.S. President Donald Trump’s tariffs and a decrease in public investments.
Chinese markets presented a mixed picture; Hong Kong’s Hang Seng index declined by 1% to 25,835.99, while the Shanghai Composite index saw a modest gain of 0.6%, ending at 3,927.19. In the coming days, Chinese leaders are expected to conduct a significant annual economic policy planning conference.
Elsewhere in Asia, South Korea’s Kospi slightly rose by 0.2% to 4,109.21, and Taiwan’s benchmark experienced a notable jump of 0.8%. In Australia, however, the S&P/ASX 200 index fell by 0.3%, closing at 8,609.70.
On Friday, U.S. markets saw slight gains, with the S&P 500 increasing by 0.2% to finish just shy of its record closing level of 6,870.40, briefly topping the mark during the session. The Dow Jones Industrial Average also rose by 0.2% to 47,954.99, while the Nasdaq composite gained 0.3%, reaching 23,578.13. These modest gains capped off a relatively quiet week for Wall Street, serving as a respite following several weeks of significant volatility.
Ulta Beauty was among the leaders in the market, surging 12.7% after reporting stronger-than-expected profits and revenue for the past quarter. Victoria’s Secret & Co. also soared 18% following a less severe-than-anticipated loss. Meanwhile, Warner Bros. Discovery's shares rose by 6.3% after Netflix announced plans to acquire the company for $72 billion in cash and stock. Conversely, Netflix shares fell by 2.9%, and Paramount Skydance, previously considered a strong candidate to purchase Warner Bros., dropped by 9.8%.
This week, the focal point will be the Federal Reserve’s interest rate decision. Traders widely anticipate that the Fed will implement a cut to its main interest rate, aimed at bolstering the slowing U.S. job market. If a cut is announced, it would mark the third reduction this year. Lower interest rates typically boost asset prices and can support economic activity, although they risk exacerbating the persistent inflation, which currently sits above the Fed's 2% target.
Recent economic reports have not altered expectations for a potential rate cut. One report noted that an underlying measure of inflation favored by the Fed remained stable at 2.8% in September, aligning with economists' forecasts. Additionally, a separate report from the University of Michigan indicated that U.S. consumers are lowering their inflation expectations to 4.1% for the upcoming year, down from 4.5% the previous month. This adjustment reflects the lowest consumer inflation forecast since January, significant as heightened inflation expectations can contribute to a self-perpetuating cycle of rising prices.
In early trading on Monday, U.S. benchmark crude oil prices rose by 11 cents to reach $60.19 per barrel, while Brent crude, the international standard, also added 11 cents, trading at $63.86 per barrel. The dollar dipped slightly to 155.09 Japanese yen from 155.30 yen late Friday, while the euro strengthened to $1.1651 from $1.1639.
— Elaine Kurtenbach
