Global markets mixed as investors await U.S. inflation data to gauge federal reserve’s next interest rate move

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Global stock markets traded cautiously on Monday as investors weighed political uncertainty, weakening economic signals from China and a crucial US inflation report expected to shape expectations for the Federal Reserve’s next interest-rate decision.

Asian equities delivered a mixed performance. Japan’s Nikkei edged 0.2% higher after an upward revision to economic growth, while MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.5%. Chinese blue-chip stocks fell 0.5% after data showed consumer prices declining 0.6% in November from the previous month, highlighting persistent weakness in domestic demand.

South Korean equities dropped 2.4% as political turmoil surrounding President Yoon Suk Yeol added another source of uncertainty for regional markets.

Investors were also preparing for US consumer price data, with November core inflation expected to remain at 3.3% year-on-year. The figures were viewed as the final major hurdle before the Federal Reserve’s December policy meeting, with markets pricing an approximately 85% probability of a quarter-point rate reduction.

Bruce Kasman, head of economic research at JPMorgan, said, “Incoming data support our call for global growth lift into year-end, despite a slipping Euro area and building political stress.”

European investors were simultaneously preparing for central bank decisions across the region. The European Central Bank was widely expected to cut rates by 25 basis points, while markets also anticipated easing from the Bank of Canada and Swiss National Bank.

Geopolitical developments added to the cautious mood, with political instability in South Korea and the collapse of Bashar al-Assad’s government in Syria increasing uncertainty.

With inflation, central-bank policy and geopolitical risks converging, global markets remained sensitive to economic data as investors assessed whether monetary easing could continue without renewed inflationary pressure.