Monday’s trading saw Asia finish on a high, with Japan and China hitting record levels and investors showing renewed optimism ahead of pivotal global developments. China’s Shanghai Composite surged 0.97%, marking its highest close in nearly a decade, while the Shenzhen Component Index rose by 1.73%. Japan’s Nikkei share average extended last week’s gains, also closing at a record high of 43 714.31, increasing by 0.77%, as a weaker yen supported automakers’ stocks. 

The broader Topix Index reached a record close at 3 120.96, rising 0.43%, with both indices marking record levels for the second consecutive session. The MSCI Asia Pacific Index edged 0.40% higher, signalling generally positive momentum across the region. By contrast, Hong Kong’s Hang Seng Index dipped slightly, closing 0.14% lower. Overall, the performance across these key markets reflects rising investor confidence as they anticipate accommodative monetary policy and improved geopolitical stability.

European equities, however, drifted lower on Monday as investors stayed cautious ahead of a week set to be dominated by central bank signals and geopolitical developments. The STOXX 50 slipped 0.30% to 5 431, the STOXX 600 was unchanged at 554, and Frankfurt’s DAX eased 0.20% to 24 302.

Attention remains on the Jackson Hole Symposium later this week, where Federal Reserve Chair Jerome Powell may outline the path for interest rates. Softer labour market data has strengthened the case for further easing. Geopolitics also weighed on sentiment, with Ukrainian President Volodymyr Zelensky and European leaders in Washington for high stakes talks with US President Donald Trump on a potential peace deal.

Sector performance was mixed. Banks dragged on indices, with BNP Paribas and Nordea both falling more than 1.50%. By contrast, Vestas jumped 15% after benefitting from favourable changes to US tax credits, while Novo Nordisk advanced over 6% after cutting the direct-purchase price of its obesity drug Wegovy.

In London, the FTSE 100 outperformed its continental peers, edging higher to close at 9 140.46. Defence and aerospace stocks gained on the back of geopolitical tensions, with Babcock International up as much as 5% after RBC initiated coverage, citing its strong Ministry of Defence ties and improved balance sheet. Endeavour Mining was supported by higher gold prices, while Dr Martens also rose. In contrast, Cranswick slipped after reports of animal cruelty at one of its farms weighed on sentiment towards the meat producer.

US stocks were largely flat on Monday, as investors paused following recent gains. The S&P 500 and Nasdaq showed little movement, while the Dow slipped 0.10%. Attention is turning to a busy week ahead, with earnings from major retailers—including Walmart, Target, Home Depot, and Lowe’s—expected to influence market direction, alongside Federal Reserve Chair Jerome Powell’s highly anticipated speech at the Jackson Hole symposium. Markets are pricing in a high probability of a September rate cut, while the release of the Fed’s July meeting minutes on Wednesday could provide further insight into policy debates.

Geopolitical developments also remained in focus after President Donald Trump met with Ukrainian President Zelensky and European leaders, following his recent summit with Russian President Putin. Although no ceasefire breakthrough was achieved, agreement was reached on US and European security guarantees for Ukraine. Treasury yields held above 4.30% as investors weighed these developments. On the corporate front, Intel shares fell nearly 4% amid reports that the White House is considering acquiring a 10% stake, adding to cautious sentiment.

South African markets ended in negative territory on Monday, with the All Share Index falling 0.79%, the JSE Top 40 declining 0.87% and the Financial 15 down 0.75%. The pullback came amid cautious investor sentiment, as markets weighed global economic developments and geopolitical uncertainties. Despite the equity declines, the rand showed relative resilience, strengthening 0.38% against the dollar to close at R17.64 and rising to R20.57 against the euro. Against the pound, however, the local currency eased 0.34%, ending the session at R23.82.

In commodities, gold eased to $3 331.90 per ounce, while platinum fell 0.49%. Brent crude rose 1.15% to $66.61 per barrel, supported by optimism over demand and geopolitical developments.