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12/05/26
7
Asian Stocks Mixed as Inflation Data and Geopolitical Risks Loom
Asian stock markets traded unevenly on Tuesday as investors weighed renewed geopolitical risks and remained cautious ahead of key U.S. inflation data. Sentiment was also restrained by uncertainty surrounding the planned meeting between U.S. President Donald Trump and China’s President Xi Jinping, which could influence trade and market expectations later this week.
Markets were pressured by fading hopes for a durable de-escalation in the Middle East. Trump rejected Iran’s latest peace proposals aimed at ending a conflict that has now stretched beyond two months, with disagreements still centered on Tehran’s nuclear program and the status of the Strait of Hormuz. Reports also indicated growing frustration in Washington over the pace of negotiations and the continuing disruption around the strategic waterway.
Trump described the ceasefire as extremely fragile, raising concerns that the conflict could widen again. Some aides have also suggested that he is increasingly open to resuming larger-scale military action. That shift has added to investor caution, particularly in markets sensitive to geopolitical shocks and higher energy prices.
The risk of a further rise in crude oil prices has become a key concern because it could feed inflation and strengthen the argument for a more restrictive policy stance from major central banks. In the United States, markets have already reduced expectations for any additional interest-rate cuts in 2026, a view reinforced by the stronger-than-expected nonfarm payrolls report released on Friday.
Traders are now waiting for the latest U.S. inflation readings, with the Consumer Price Index due on Tuesday and the Producer Price Index on Wednesday. The data could shape expectations for the Federal Reserve’s next move. Alongside the Trump-Xi summit and developments in the Middle East, the figures are likely to keep global markets volatile in the near term.
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