Japanese PM Sanae Takaichi’s remarks on the intention to carry out a military response to a China–Taiwan conflict provoked a sharp diplomatic backlash from Beijing, which issued a travel warning that caused up to 80% of Japan-bound Chinese tour bookings to collapse and an estimated 500,000 ticket cancellations. The shock wave hit Japan’s economy immediately, with Nomura warning of potential annual losses of 2.2 trillion yen and a 0.36% GDP crater, enough to tip growth negative. Tourism and retail stocks were hit first, including double-digit drops for Mitsukoshi Isetan and Shiseido, as Chinese visitors account for roughly 30% of Japan’s tourism spend. Chinese public sentiment turned hostile, amplified by state media framing the remarks as a dangerous provocation tied to historical grievances. Tokyo refuses to retract the comments, heightening fears among analysts that prolonged tensions could inflict deeper economic damage.
EQUITY
The S&P 500 continues falling for its fourth consecutive daily loss, mainly due to AI-related megacap technology stocks like Nvidia, Microsoft, Amazon, and Meta facing valuation reassessment. Market sentiment soured as the odds of a December Fed rate cut reduced to 48.9%, down from 90% before the October meeting. The energy sector performed the best, supported by an increase in crude oil prices, while Home Depot fell 6% on missed earnings.
GOLD
Gold prices reversed its decline, pushing to near $4,100 as investors adopted a cautious stance ahead of critical U.S. economic data, including the FOMC meeting minutes and the long-delayed non-farm payrolls report. Recent jobless claims hitting a two-month high intensified uncertainty around the Fed rate trajectory, with a lower chance of a cut pushing gold prices higher.
OIL
Brent crude edged toward $64 a barrel even though U.S. crude inventories stockpiled by 4.45 million barrels, the third consecutive weekly build. The American Petroleum Institute’s data shows simultaneous increases in gasoline and distillate stocks, with the IEA forecasting a record surplus in 2026. Market participants remain cautious, balancing abundant crude stocks against tightening supply risks linked to geopolitical disruptions.
CURRENCY
The dollar index is steady at 99.60 as investors turned cautious ahead of critical jobs data and Fed minutes. The yen rebounded from a nine-month low against the dollar with renewed safe-haven demand fuelled by a global equity sell-off leading to higher Japanese government bond yields and BOJ policy speculation, while risk-sensitive currencies like the Australian and New Zealand dollars declined.
