Federal Reserve's Upcoming Interest Rate Decision Influences Market Sentiment

Shares were mixed in Europe and Asia as investors tread cautiously ahead of the Federal Reserve's interest rate decision this week. 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 edged 0.1% higher to 9,675.51. In Asia, Japan's Nikkei 225 index slipped 0.2% to 50,581.94 amid flaring Japan-China tensions. This follows a weekend incident where Chinese military aircraft locked radar on Japanese fighter jets.

Japan's government reported that the economy contracted at an annual pace of 2.3% in the July-September period, revised from an earlier estimate of 1.8%. 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's trade surplus exceeded $1 trillion so far in 2025, despite a 29% year-on-year drop in exports to the U.S. 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%, finishing just shy of its record closing level, while the Dow industrials added 0.2% and the Nasdaq composite gained 0.3%. This week, attention focuses on the Fed's interest rate decision, as traders widely expect a cut in the main interest rate.

If the Fed cuts rates, it would be the third cut of the year, aimed at shoring up the slowing U.S. job market. Reports released on Friday showed an underlying measure of inflation at 2.8% in September, meeting economists' expectations.

U.S. consumers' inflation expectations for the year ahead have decreased to 4.1%, down from 4.5% last month, according to the University of Michigan. In other dealings, U.S. benchmark crude oil rose to $60.16 per barrel, while Brent crude remained nearly unchanged at $63.77 per barrel.

The dollar rose to 155.44 Japanese yen from 155.30 yen, and the euro rose to $1.1650 from $1.1639.