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Japan avoids recession as markets tread water

Japanese equities edged lower at the start of the week after data showed the economy returned to minimal growth in the fourth quarter, narrowly sidestepping a technical recession but falling short of market expectations. Trading across Asia was subdued with several major markets closed for holidays, while European equities ended last week mixed. On Wall Street, major US indices failed to build a meaningful rebound from losses earlier in the week despite softer January inflation. Gold prices slipped around 1% on Monday to just under USD 5000 an ounce as investors took profits following a 2.4% rise on Friday. Bitcoin was down 2.7%, trading around USD 68,500 to start the week.

  • Data
  • Autore Shane Strowmatt, Senior Investment Writer
  • Tempo di lettura 5 minuto

Investor
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Japan’s gross domestic product returned to growth in the fourth quarter with a 0.1% expansion on both a quarter-on-quarter and year-on-year basis, following a 0.7% contraction in the previous quarter and 0.6% annual growth in the third quarter of 2025, according to data released on Monday. The modest increase, driven mainly by private consumption while exports and public spending weakened, fell short of market expectations. The figures helped Japan sidestep a technical recession, but Japan’s Nikkei 225 was nevertheless trading 0.2% lower on Monday. Trading elsewhere in Asia was muted as markets in China, South Korea and Taiwan were closed for holidays, while Hong Kong’s Hang Seng index gained 0.3%. Australia’s S&P/ASX 200 was trading 0.2% higher and India’s Nifty 50 was up 0.3%.

US inflation gauge and growth data in spotlight

This week, attention is on the United States as markets digest fourth-quarter gross domestic product figures and a full set of December personal consumption expenditures inflation data on Friday, including the core personal consumption expenditures price indices and personal spending, which are key inputs for Federal Reserve (Fed) policy deliberations. US monetary policymakers are active throughout the week, with several Federal Open Market Committee (FOMC) members scheduled to speak and the publication of the latest FOMC meeting minutes on Wednesday providing further insight into the central bank’s thinking. In Europe, markets monitor January inflation data from Germany (Tuesday), France (Wednesday) and the UK (Wednesday), as well as purchasing managers’ indices across the euro area and the UK on Friday for clues about the region’s growth trajectory. From Japan, January consumer price index data (Friday) offer details on the nation's inflation backdrop. The Asian macroeconomic calendar otherwise remains thin, as markets in China, Hong Kong and some other Asian countries remain shut for much of the week for New Year holidays. US markets are also closed on Monday in observance of Presidents Day.

US stocks fail to sustain rebound

Major US equity indices closed little changed on Friday as an attempted recovery from sharp losses earlier in the week faltered ahead of the long holiday weekend. The Dow Jones Industrial finished 0.1% higher at 49,500.93 points, the S&P 500 gained 0.1% as well to 6,836.17 points and the Nasdaq 100 rose 0.2% to 24,732.73 points, but all three indices ended the week between 1.2% and 1.4% lower. A slightly weaker-than-expected rise in US inflation in January reinforced expectations of interest-rate cuts, supporting gold-related stocks such as miners Agnico Eagle Mines and Barrick Mining, yet did not provide lasting momentum for equities overall. Headline consumer price index (CPI) rose 2.4% year-on-year, down from 2.7% in December and marking the lowest rate since May last year, while core CPI, which excludes food and energy, increased 2.5% over the same period, in line with market expectations. Technology shares remained under pressure amid ongoing concerns about heavy artificial-intelligence investment and lofty valuations, with Nvidia and Apple falling more than 2%.

Swiss inflation steady at low level

Swiss annual inflation remained at 0.1% in January, with the Consumer Price Index slipping 0.1% from December to 99.9 points, according to data published by the Federal Statistical Office on Friday. Domestic goods were 0.5% more expensive than a year earlier, while prices for imported goods were 1.5% lower, and overall core inflation for the total basket – excluding fresh and seasonal products, energy and fuels – also stood at 0.5%. The latest reading came in at the lower end of market projections. The Swiss Market Index outperformed European peers on Friday, gaining 0.5%.

Euro-area growth remains moderate

Eurostat reported on Friday that euro-area gross domestic product increased by 1.3% year-on-year in the fourth quarter, easing slightly from 1.4% in the third quarter, while GDP in the wider EU grew by 1.5% after 1.6%. The number of employed persons in the euro area rose by 0.6% year-on-year in the fourth quarter, compared with a 0.7% increase in the EU, pointing to a still moderate but steady labour-market expansion. European stock markets ended Friday in mixed fashion. The Euro Stoxx 50 slipped 0.4%, while Germany’s DAX rose 0.3% and France’s CAC 40 declined 0.4%.

Corporate and economic calendar

Corporate news in focus: There is no major corporate news scheduled today.

Economic data in focus: Swiss gross domestic product (09:00), euro-area manufacturing production (11:00) and Canadian Consumer Price Index (14:30).

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Editor: Alessandro Fezzi
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