Global equity markets edged higher in subdued trading conditions as several major financial centers remained closed for public holidays, while weaker than expected economic data from Japan weighed on sentiment in Asia.
With the Lunar New Year holiday keeping markets in China, South Korea and Taiwan shut, and US cash markets closed for Presidents Day, trading volumes were thin across regions. Futures on major US indices posted modest gains, helping stabilize broader risk appetite after last week’s technology driven selloff.
In Europe, the pan regional STOXX 600 index moved slightly higher, supported by a rebound in banking stocks. Financial shares had come under pressure recently as concerns over artificial intelligence spending spilled into wider market segments. Monday’s calmer tone allowed investors to cautiously reenter some positions, though gains remained limited.
Earlier in the day, Japan reported that its economy expanded at an annualized pace of just 0.2 percent in the fourth quarter, significantly below market expectations. Economists had forecast stronger growth, but government spending and softer domestic demand weighed on activity. The weaker data underscores the fragile nature of Japan’s recovery and presents challenges for policymakers seeking to reinforce momentum.
Japan’s Nikkei index closed marginally lower after having recorded strong gains last week. Investors are balancing disappointing growth figures with expectations that fiscal measures and policy support could help stimulate activity later in the year. Political developments have also contributed to optimism among some market participants who believe the government has room to pursue more assertive economic initiatives.
Currency markets reflected the cautious mood. The US dollar held relatively steady after declining last week, as traders positioned ahead of upcoming US economic releases. Market participants are closely watching fourth quarter US gross domestic product data and global business activity surveys scheduled for later this week. Expectations are for a moderation in US growth compared with the previous quarter, which had shown robust expansion.
Bond markets have seen steady inflows as some investors rotate out of equities. Futures pricing suggests that traders continue to anticipate potential interest rate cuts from the Federal Reserve later this year, depending on inflation trends and economic performance. Lower yields in recent sessions have offered partial support to equity markets but have also signaled ongoing uncertainty about the strength of global growth.
In commodities, gold prices retreated after recent volatility, while oil prices edged higher. Precious metals have experienced sharp swings as leveraged positions were adjusted amid shifting expectations for monetary policy and currency movements.
With trading activity expected to pick up once major markets fully reopen, investors are likely to focus on fresh economic indicators and corporate earnings to assess whether the recent stabilization in equities can be sustained.
