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(Bloomberg) — Asian stocks are set to come under pressure early Monday as traders navigate increasing tensions between the US and European Union and looming central bank monetary policy decisions.

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Australian shares slipped at the open and futures in Hong Kong point to an early loss, while those in Japan were steady. US futures contracts traded in a tight range. The S&P 500 closed little changed and Treasuries climbed on Friday as traders resurfaced expectations the Federal Reserve’s next cut will be in September after US retail sales slumped by the most in nearly two years. Australian bonds edged higher and the dollar was steady.

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The tepid start to the week comes as investors monitor a ratcheting in tensions between the US and Europe after President Donald Trump’s tariff plans have sparked threats of retaliation. Vice President JD Vance attacked longstanding European allies at a security conference at the weekend while plans to negotiate an end to the war in Ukraine have left the bloc on the sidelines. 

“The lack of visibility given what still seems to be an unpredictable US administration means that short-term market participants do not have much conviction,” said Marc Chandler, chief market strategist at Bannockburn Global Forex. “The bilateral talks between the US and Russia over Ukraine is a bit like the Suez Crisis (1956) where US interests diverged starkly from the UK and France. Now may be the most strained relationship between the US and Europe since then.”

Investor focus is likely to remain on macroeconomic data in the short term with a raft of policy decisions from Wellington to Jakarta due this week. The Reserve Bank of Australia is expected to begin its long awaited interest rate cut cycle on Tuesday, while New Zealand’s central bank is likely to continue its rapid easing to support a sluggish economy on Wednesday. 

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“We expect the RBA to finally start its easing cycle, as inflation has been easing meaningfully,” Societe Generale economists including Wei Yao wrote in a note to clients. 

Investors will also be looking to China stocks after a gauge of US-listed mainland shares climbed 2.3% on Friday amid a euphoria over artificial intelligence companies. A potential meeting this week between President Xi Jinping and e-commerce icon Jack Ma could be the next catalyst to extend the rally in China’s stocks.

“The market is showing a genuine shift in animal spirits,” said Kyle Rodda, a senior analyst at Capital.com in Melbourne. “On top of some green shoots in the economic data, the DeepSeek breakthrough that came to wider market attention a few weeks ago seems to have stoked risk appetite in China.”

Elsewhere this week, inflation readings in Japan, UK and Canada are due as well as jobs data in Australia. China’s banks are set to keep their loan prime rates steady after credit expansion picked up far more than expected in January from a year ago, though overall credit growth remains at a historically weak level.  

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In commodities, oil extended its loss to a fourth day. Oil fell Friday as concerns of ample supply and Trump’s tariffs hurting demand overshadow US threats to Iranian crude exports. Gold was steady.

Some of the key events this week: 

• Japan GDP, tertiary industry index, Monday
• Presidents Day holiday in the US; bond and stock markets are closed, Monday
• Australia rate decision, Tuesday
• UK jobless claims, unemployment, Tuesday
• Bank of England Governor Andrew Bailey speaks, Tuesday
• Canada CPI, Tuesday
• New Zealand rate decision, Wednesday
• Indonesia rate decision, Wednesday
• UK CPI, Wednesday
• South Africa CPI, retail sales, Wednesday
• US FOMC minutes, housing starts, Wednesday
• Australia unemployment, Thursday
• China loan prime rates, Thursday
• Eurozone consumer confidence, Thursday
• G-20 foreign ministers meet in South Africa, Thursday – Friday
• Reserve Bank of Australia Governor Michele Bullock and officials testify to parliamentary committee, Friday
• Japan CPI, Friday
• Eurozone HCOB manufacturing & services PMI, Friday
• UK S&P Global manufacturing & services PMI, Friday
• US S&P Global manufacturing & services PMI, Friday
• Bank of Canada Governor Tiff Macklem speaks, Friday

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Some of the main moves in markets:

Stocks

• S&P 500 futures were unchanged as of 8:27 a.m. Tokyo time
• Hang Seng futures fell 0.6%
• Australia’s S&P/ASX 200 fell 0.8%

Currencies

• The euro was little changed at $1.0486
• The Japanese yen was little changed at 152.29 per dollar
• The offshore yuan was little changed at 7.2609 per dollar

Cryptocurrencies

• Bitcoin fell 1% to $96,236.48
• Ether fell 1% to $2,660.95

Bonds

• Australia’s 10-year yield declined one basis point to 4.40%

Commodities

• West Texas Intermediate crude fell 0.6% to $70.33 a barrel
• Spot gold was little changed

This story was produced with the assistance of Bloomberg Automation.

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