Cautious optimism dominates as China holds stimulus for later

Asian equity markets began the week on a subdued note, with major Chinese indices extending recent losses. The Shanghai Composite slipped 0.2%, while the Shenzhen Component fell 0.62%. Monday’s modest declines reflect lingering uncertainty around China’s policy trajectory and the broader global macroeconomic backdrop.

Investor sentiment weakened after Chinese authorities reiterated confidence in achieving their full-year growth target of around 5%, yet refrained from unveiling any immediate new stimulus measures. Instead, policymakers pledged to roll out additional pro-growth initiatives during the second quarter, suggesting a deliberate wait-and-see strategy as they gauge the evolving impact of recent tariff escalations with the United States.

Despite President Donald Trump signaling a potential willingness to lower tariffs on Chinese goods, and Beijing moving to exempt certain US products from its steep 125% levies, skepticism remains high. With no formal negotiations yet underway, traders remain wary of headline risks that could quickly swing sentiment in either direction.

Heavy economic calendar this week

Trading volumes were particularly light across Asia, even by typical Monday standards. A near-empty economic calendar offered little immediate catalyst, encouraging markets to stay in consolidation mode ahead of a dense slate of major data releases later this week.

Attention is squarely focused on critical releases, including:

• US and Eurozone Q1 GDP growth figures
• Inflation data from the US, Eurozone, and Australia
• The highly anticipated US non-farm payrolls report for April

Markets are eager for confirmation on whether recent tariff shocks have begun to filter into real economic activity. While early snapshots from global PMIs and corporate earnings have been mixed, this week’s indicators will provide much clearer evidence.

For now, the broader market mood remains cautiously optimistic. Should the incoming data beat expectations, there remains room for further rebound across risk assets, particularly equities and high-beta currencies.

BoJ in focus as Yen faces renewed pressure

In currency markets, the Japanese Yen continued to soften, extending last week’s declines as global risk appetite improved. However, the BoJ’s upcoming meeting — including the release of new economic projections — could be pivotal for Yen direction in the coming sessions.

Speculation is mounting that the Bank of Japan may delay its next interest rate hike amid growing uncertainties related to the US-China tariff confrontation. Should the central bank’s tone turn more dovish, the Yen could face another wave of weakness against its major peers.

Given the tight link between global risk dynamics and Yen flows, traders will be closely monitoring both the BoJ’s messaging and broader market reactions to this week’s crucial economic reports.