APAC Markets Shaped by Geopolitics, Rates, and AI Demand

Financial markets in Asia-Pacific (APAC) are being shaped by a mix of geopolitical risks, energy price volatility, interest rate expectations, and uneven economic growth. According to JustMarkets, these factors are creating divergent opportunities across currencies, commodities, and equity indices. The global backdrop remains mixed, with the International Monetary Fund (IMF) estimating world gross domestic product (GDP) growth at 3.0 per cent this year.

Malaysia's 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 traders are increasingly focusing 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 central bank will continue fine-tuning monetary accommodation based on changes in economic activity, prices, and financial conditions.

China's growth trajectory is different from that of other economies. 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.

The technology cycle is becoming increasingly important, particularly as AI-related demand supports economies integrated into global technology production chains. The IMF has highlighted AI-driven demand as a source of support for economies linked to the technology supply chain.