Japan GDP disappoints amid thin market activity

With few major data releases yesterday, US markets closed for the President’s Day holiday, and the approaching Lunar New Year holiday meaning limited trading in Asia, significant macroeconomic developments or market moves were thin on the ground. One notable data point was Japan’s Q4 growth figures which came out early yesterday morning, which showed a fairly weak expansion in the final quarter of the year. Growth was just 0.2% q/q annualised, up from the 2.6% contraction in Q3 but significantly undershooting the predicted 1.6%. Consumer spending was up 0.1% while capital spending rose 0.2%. The tourism sector, which has underpinned growth through the exports channel through much of 2025, weakened in Q4 after China issued a travel warning against Japan, and this was a drag on headline growth. Growth for full-year 2025 was 1.1%, with consensus projections expecting a modest slowdown to 0.8% this year.

Today’s Economic Data and Events

11:00 UK ILO unemployment rate, 3mths to December. Forecast: 5.1%

14:00 Germany ZEW expectations survey, February. Forecast: 65.2

17:30 Canada CPI inflation, % y/y. Forecast: 2.4%

Fixed Income

• US Treasuries did not trade yesterday with US markets shut for President’s Day.

FX

• Currency markets were fairly quiet to start the week amid market closures in the US and Asia, but what movements there were were largely in the dollar’s favour. EUR closed down by 0.1% to 1.1851, while GBP fell 0.2% to 1.3629.
• The most notable move was by JPY which weakened by 0.5% against the USD following the weak Q4 growth figures released yesterday morning. It ended the day at 153.47.

Equities

• US equity markets were shut yesterday and there was limited trading in Asia. Locally, the ADX closed down 0.4% while the DFM dropped 0.1%. Saudi Arabia’s Tadawul ended the day 0.4% lower.

Commodities

• WTI did not trade yesterday due to the US public holiday, but Brent futures ended the day 1.3% higher at USD 68.7/b amid thin trading volumes. Concerns around escalating tensions in Iran were the driver, as the Iranian navy carried out drills near the Strait of Hormuz ahead of talks with the US scheduled today.
• Gold prices fell 1.0% on Monday, slipping back below 5,000 to USD 4,992.1/oz amid thin Asian trading.