APAC Markets in 2026 Shaped by Geopolitics, Rates, AI Demand

The Asia-Pacific (APAC) financial markets in 2026 are being shaped by a mix of geopolitical risks, energy price volatility, interest rate expectations, and uneven economic growth.

According to JustMarkets, the global backdrop remains mixed, with International Monetary Fund (IMF) estimates putting world gross domestic product (GDP) growth at 3.0 per cent this year.

The IMF's estimate is relevant for Malaysia as developments in major trading partners, particularly China and other Asian economies, could have implications for the ringgit, equities, commodities, and investor sentiment.

JustMarkets noted that 'with such changes occurring in the financial markets, traders increasingly focus on different asset classes: currencies, commodities, and indices.'

In Japan, monetary policy and inflation expectations are shaping markets. The Bank of Japan (BoJ) expects underlying inflation to gradually rise towards levels consistent with its 2.0 per cent target.

The BoJ will continue fine-tuning monetary accommodation based on changes in economic activity, prices, and financial conditions, while also highlighting foreign exchange movements, crude oil prices, and AI-related demand as factors affecting the economy.

China's growth trajectory is different from Japan's. Official estimates showed China's GDP expanded 4.3 per cent year-on-year in the second quarter (Q2) of 2026, slowing from 5.0 per cent in Q1, while growth for the first half of the year was estimated at 4.7 per cent.

Changes in China's growth outlook can influence the yuan as well as market sentiment across economies exposed to Chinese trade and commodity demand.

The technology cycle is becoming increasingly important, particularly as AI-related demand supports economies integrated into global technology production chains.