Asian markets are bracing for a mixed start to the week as traders adjust to ongoing uncertainties surrounding Federal Reserve policy and global economic conditions.  This follows a 1.3% decline in the S&P 500 on Friday, which erased over half of the index's post-US election gains.

Concerns over President-elect Donald Trump's proposed fiscal policies, including potential tariffs and tax cuts, have sparked fears of rekindling inflation in an already robust US economy. Analysts are now debating whether the Federal Reserve will proceed with a rate cut in December, with the likelihood falling below 50%. Shane Oliver, Chief Economist at AMP Ltd. in Sydney, noted that while another cut is still plausible, "a slower pace of easing is likely next year."

The dollar held steady in early trading after notching a seventh consecutive weekly gain, supported by surging Treasury yields.Commodities also presented a mixed picture, with oil prices slipping and gold climbing.

Attention in Asia this week will focus on Bank of Japan Governor Kazuo Ueda, who is set to speak on Monday. Markets are closely watching for signals on potential rate hikes, with swaps data suggesting about 14 basis points of increases in December. Barclays strategists indicated that Ueda's remarks will be crucial for gauging the central bank's policy direction, particularly as the yen faces mounting pressure.

Inflation readings from the UK and eurozone will also be key to assessing monetary policy in these regions.

Key market movements early Monday included a 0.4% decline in Australia's S&P/ASX 200 and a 0.2% gain in Hang Seng futures. West Texas Intermediate crude fell 0.4% to $66.77 a barrel, while spot gold rose 0.3% to $2,569.73 an ounce.

In the corporate sphere, Nvidia's upcoming earnings report could test the durability of the AI-driven stock rally, with analysts forecasting strong demand for GPUs to bolster the company's performance.This week's calendar includes several critical events, such as the Group of 20 Summit in Brazil, eurozone and UK inflation data, and multiple speeches from central bank officials.

Bloomberg