Asian shares are mixed ahead of interest rate decision by the Fed

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BANGKOK (AP) — Shares were mixed in Europe and Asia as investors were treading cautiously Monday ahead of an interest rate decision this week by the Federal Reserve.

Germany's DAX was unchanged at 24,025.15, while the CAC 40 in Paris lost 0.3% to 8,090.47. Britain's FTSE 100 shed edged 0.1% higher, to 9,675.51.

The future for the S&P 500 edged up 0.1% while that for the Dow Jones Industrial Average was little changed.

In Asia, flaring Japan-China tensions weighed on sentiment after Chinese military aircraft locked radar on Japanese fighter jets during the weekend. The episode occurred weeks into a downturn in relations after a remark about defense of Taiwan by Japanese Prime Minister Sanae Takaichi angered Beijing.

Defense Minister Shinjiro Koizumi said Japan had formally protested the incident, calling it “an extremely regrettable” act and “a dangerous” one that “exceeded the scope necessary for safe aircraft operations.”

Tokyo's Nikkei 225 index slipped 0.2% to 50,581.94 after the government reported revised government data showing that Japan’s economy contracted at an annual pace of 2.3% in the July-September period, not the 1.8% annual rate earlier reported. Japanese exports suffered from the impact of U.S. President Donald Trump’s tariffs and public investments slipped.

Chinese markets were mixed, with Hong Kong's Hang Seng falling 1.2% to 25,765.36, while the Shanghai Composite index gained 0.5% to 3,924.08.

China reported its trade surplus has exceeded $1 trillion so far in 2025, as exports climbed 5.9% in November from a year earlier. Exports to the U.S. sank 29% year-on-year, while shipments to other destinations helped offset that decline.

Chinese leaders convened a major annual economic policy planning conference to sketch out details for the coming year and beyond.

Elsewhere in Asia, South Korea's Kospi added 1.3% to 4,154.85, while Taiwan's benchmark jumped 1.2%.

In Australia, the S&P/ASX 200 shed 0.1% to 8,624.40.

On Friday, the S&P 500 added 0.2% and finished just shy of its record closing level set in October after briefly topping that level during the day.

The Dow industrials added 0.2% and the Nasdaq composite gained 0.3%.

The modest moves capped a quiet week for Wall Street, offering a respite following weeks of sharp and scary swings.

This week, attention will focus on what the Federal Reserve will do with interest rates, whether too many dollars are flowing into artificial-intelligence technology and if sharp drops for cryptocurrencies would bleed over into other markets.

After some back and forth, the widespread expectation among traders is now that the Fed will cut its main interest rate Wednesday in hopes of shoring up the slowing U.S. job market. If it does, that would be the third cut of the year.

Lower interest rates boost prices for investments and help the economy. The downside is that they can worsen inflation, which is stubbornly remaining above the Fed’s 2% target.

Economic reports released on Friday did little to change expectations for a coming cut. One said that an underlying measure of inflation that the Fed prefers to use was at 2.8% in September, exactly as economists expected.

A separate report said U.S. consumers appear to be downgrading their expectations for inflation coming in the near future. They’re now forecasting 4.1% inflation for the year ahead, down from their forecast of 4.5% last month, according to the University of Michigan.

That’s the lowest such forecast since January, which is important because heightened expectations for inflation can create a vicious cycle that only worsens inflation.

In other dealings early Monday, U.S. benchmark crude oil added 8 cents to $60.16 per barrel. Brent crude, the international standard, was nearly unchanged at $63.77 per barrel.

The dollar rose to 155.44 Japanese yen from 155.30 yen late Friday. The euro rose to $1.1650 from $1.1639.