Geopolitics, rates, AI demand to shape APAC markets in 2026

KUALA LUMPUR: Financial markets in 2026, including Malaysia, are being shaped by a mix of geopolitical risks, energy price volatility, interest rate expectations and uneven economic growth, creating divergent opportunities across currencies, commodities and equity indices, 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.

For Malaysia, developments in major trading partners, particularly China and other Asian economies, could have implications for the ringgit, equities, commodities and investor sentiment.

"With such changes occurring in the financial markets, traders increasingly focus on different asset classes: currencies, commodities, and indices," JustMarkets said in a statement.

In the Asia-Pacific (APAC) region, monetary policy, currency movements, technology demand and equity markets are among the key factors influencing trading activity.

Japan provides a clear example of how monetary policy and inflation expectations are shaping markets.

According to the Bank of Japan (BoJ), underlying inflation is expected to gradually rise towards levels consistent with its 2.0 per cent target.

The central bank has said it 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, meanwhile, is experiencing a different growth trajectory.

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.

Regional stock indices provide another gauge of these shifts, with markets in Japan, China, Hong Kong and other APAC economies reflecting changing expectations for growth, exports, consumer spending, manufacturing and technology.

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, while the BoJ has also identified growing AI-related demand as a positive contributor to domestic economic activity.

Commodities, particularly gold and oil, also remain closely linked to the APAC market outlook.

Higher energy prices can increase cost pressures for oil-importing economies, while Asia remains an important market for gold.

The World Gold Council expects investment activity in APAC to make a larger contribution to gold demand growth in the second half of 2026. During the first six months of the year, Asian gold exchange-traded funds recorded net inflows of 70 tonnes.

For APAC traders, currencies tend to reflect differences in monetary policy, equity indices provide signals on growth and technology trends, while commodities remain closely tied to inflation, energy markets and geopolitical developments.

"Different conditions require different strategies, so traders should pay as much attention to flexibility as to the choice of assets," JustMarkets said.

The global multi-asset broker provides access to more than 260 CFD instruments across Forex, gold, oil, indices, stocks, and other markets within one trading environment.

"This broad access allows traders to adjust their focus as market conditions change," the firm said.