Asia-Pacific Markets Mixed as China PMIs Contract and Bitcoin Slides Ahead of Key Fed Week

Asia-Pacific stocks kicked off December on a cautious note on Monday, 1 December 2025, as fresh Chinese factory data signaled ongoing economic fragility and a sharp sell-off in cryptocurrencies reinforced a broader shift away from risk assets. At the same time, traders are still betting heavily that the US Federal Reserve will cut interest rates again at its meeting next week, setting up a volatile start to one of the most important months of the year for global markets. ^[1]

Asia-Pacific stocks start December on a cautious footing

In early Asian trading, regional equity markets were pointing in different directions rather than moving in a clear trend.

MSCI’s broad index of Asia-Pacific shares outside Japan was essentially flat around 703, but remains up roughly 23% so far in 2025, putting it on track for its strongest year since 2017. ^[2]
Japan’s Nikkei 225 slipped around 1.3% in early trade as investors reacted to a firmer yen and growing expectations that the Bank of Japan (BoJ) may soon move away from negative real rates. ^[3]
Hong Kong’s Hang Seng index gained about 0.6–0.8%, while mainland Chinese benchmarks eked out modest gains, with Shanghai and Shenzhen up roughly 0.25–0.5%. ^[4]

The split performance captures the tug of war currently driving Asia-Pacific markets: optimism that the Fed will continue cutting rates is colliding with fresh evidence that global manufacturing — and China’s economy in particular — is still under real pressure.

US equity futures added to the nervous tone. Contracts linked to the S&P 500 fell around 0.7%, and Nasdaq 100 futures were down nearly 0.9%, while Euro Stoxx 50 futures pointed to weaker European cash trading later in the day. ^[5]

China’s PMIs flash a warning on growth

The main macro catalyst for Asia on Monday was a new batch of Chinese purchasing managers’ indexes (PMIs), and the message from both the official and private surveys was the same: the world’s second-largest economy is still struggling to find its footing.

Official PMIs still below 50

China’s official NBS manufacturing PMI rose slightly to 49.2 in November from 49.0 in October, remaining below the 50 line that separates expansion from contraction. ^[6]
The official non‑manufacturing PMI, which covers services and construction, slipped to 49.5 from 50.1, its weakest reading in nearly a year. ^[7]
The composite PMI, combining both sectors, dipped to 49.7, reinforcing the picture of an economy that is growing, but only weakly and unevenly. ^[8]

On the surface, the small uptick in the manufacturing headline index might look encouraging. Under the hood, though, the gains are modest: production barely scraped back to the 50 threshold, while new orders remain in contraction territory even after a slight improvement. The services side of the economy — which Beijing wants to rely on more heavily for growth — is also losing momentum as earlier holiday-related boosts fade. ^[9]

Private ‘RatingDog’ survey shows deeper weakness

The picture from the private-sector Reading — the RatingDog China General Manufacturing PMI, compiled by S&P Global and closely watched by investors — was even more downbeat:

The index fell to 49.9 in November from 50.6 in October, missing market expectations of 50.5 and slipping back into contraction. ^[10]

Survey details suggest:

Output stalled and new orders softened, especially from domestic customers.
Factories reported renewed job cuts and the first drop in purchasing activity since mid‑2023.
Inventories of inputs and finished goods were run down at the fastest pace in years as companies stayed cautious about restocking. ^[11]

Taken together, the PMIs show an economy still wrestling with weak internal demand, lingering property-sector stress and only patchy improvement in exports — despite a modest boost from a recent US–China trade truce. ^[12]

Asia’s factories stumble, but Southeast Asia and India stand out

China is not alone. New PMI readings across the region point to a broader manufacturing slowdown in Asia’s major export-led economies:

Japan, South Korea and Taiwan all saw their factory PMIs remain below 50 in November, with weak new orders underscoring subdued global demand for goods. ^[13]
Electronics-heavy South Korea is still in contraction territory, though its exports — notably chips and autos — have now risen for six straight months, hinting at a slow recovery in global tech demand. ^[14]

Underneath the gloom, there are brighter spots:

Indonesia and Vietnam posted solid PMI expansions, and Malaysia returned to growth, suggesting supply chains are continuing to diversify across Southeast Asia. ^[15]
India’s factory activity cooled slightly but remained firmly in expansion, supported by resilient domestic consumption and GDP growth at an 18‑month high. ^[16]

For Asia-Pacific investors, the message is nuanced. Manufacturing giants closely tied to global goods cycles still face headwinds, but domestic-demand stories in India and parts of ASEAN look more insulated — and could become relative winners if the slowdown in rich economies deepens.

BoJ hints and a stronger yen hit Japan’s Nikkei

Monetary policy expectations in Japan were another key driver of regional sentiment.

In a speech to business leaders in Nagoya, BoJ Governor Kazuo Ueda said the central bank would weigh the “pros and cons” of raising interest rates at its upcoming December meeting. Markets read that as the clearest signal yet that Japan might soon tighten policy after years of ultra-loose settings. ^[17]

The reaction was swift:

The yen strengthened to around ¥155.6 per US dollar, erasing some of its recent declines. ^[18]
Japan’s Nikkei 225 fell by about 1.3%, with exporters and rate‑sensitive growth stocks underperforming as investors adjusted to the possibility of higher domestic borrowing costs. ^[19]

The BoJ is now a wild card for global markets. A genuine pivot away from negative real rates would have implications not just for Japanese equities, but also for global bond flows and carry trades that have used the yen as a funding currency for years.

Fed rate‑cut hopes vs. a risk‑off mood

Despite the cautious tone in equities, the dominant macro narrative remains centered on the US Federal Reserve.

Traders are still pricing in a very high probability — close to 85–90% — that the Fed will deliver another quarter‑point cut at its policy meeting around 9–10 December, according to futures-based tools that track market expectations. ^[20]

This week’s heavy US data calendar could either reinforce or challenge that view. Key releases include:

ISM manufacturing and services surveys
ADP private payrolls
Jobless claims
Updated consumer spending and inflation readings that the Fed will review ahead of its meeting ^[21]

US 10‑year Treasury yields have drifted back above 4%, reflecting ongoing uncertainty about how far the Fed will push its new easing cycle — and whether the economy is slowing “just enough” to cool inflation without tipping into recession. ^[22]

For Asian markets, lower US rates would typically be supportive, easing pressure on local currencies and funding costs. But on Monday that optimism was overshadowed by worries that weak manufacturing data — in Asia and Europe — may be foreshadowing a deeper global slowdown. Germany’s manufacturing PMI, for example, slid to 48.2, its lowest in nine months, as new orders plunged. ^[23]

Bitcoin tumble underscores fading appetite for risk

Nowhere was the shift in risk sentiment more visible than in crypto.

Bitcoin, which often trades as a high‑beta proxy for broader risk appetite, dropped about 5% on Monday to near $86,600, sliding back below the psychologically important $90,000 level and hovering close to last month’s eight‑month low around $80,500. ^[24]

The latest leg down comes after a brutal November in which:

Bitcoin lost more than $18,000 in value — its largest monthly dollar loss since the 2021 crypto crash.
Ether fell around 22% over the month and was down another 6% on Monday, trading near $2,840. ^[25]
The overall crypto market has shed over $1 trillion from its peak, even as spot Bitcoin ETFs in the US have seen $21 billion in net inflows for the year, following a record $3.4 billion in outflows in November alone. ^[26]

Safe‑haven assets, by contrast, have caught a bid. Gold edged higher, the Swiss franc strengthened, and volatility gauges in traditional markets remain relatively subdued — a combination that suggests investors are trimming risk without yet panicking. ^[27]

For Asia-Pacific traders, the crypto slide is less about digital assets themselves and more about what it says regarding risk sentiment: when Bitcoin starts the month on the back foot, it often signals that investors are in no mood to chase stretched valuations in equities either.

Australia and the RBA: quietly important for the region

While China and the US dominate headlines, Australia’s central bank also sits in the spotlight this week.

The Reserve Bank of Australia (RBA) begins a two‑day policy meeting on Monday. Markets largely expect policymakers to hold rates steady, even though inflation remains above target and growth has been sturdier than many feared. ^[28]
Australia’s S&P/ASX 200 slipped roughly 0.25%, reflecting investor caution that the RBA might deliver a more hawkish message if domestic demand proves too strong. ^[29]

Given Australia’s importance as a commodity exporter and a bellwether for China-sensitive demand, any surprise from the RBA — whether dovish or hawkish — could ripple through both regional currencies and mining stocks.

What investors are watching for the rest of December

With global stocks wobbling, PMIs flashing amber and Bitcoin tumbling, December is shaping up to be anything but a quiet year-end. Looking ahead from 1 December, markets will be watching:

The Fed’s December decision and guidance
- A confirmed rate cut with relatively dovish language could revive the “soft landing” narrative and support risk assets into year‑end.
- Any hint that the Fed might pause cuts or is more worried about inflation than growth would likely sharpen the current risk‑off tone. ^[30]
Follow‑through from China’s policy response
- Weak PMIs increase pressure on Beijing to roll out more targeted support for manufacturing, services and the struggling property sector.
- Investors are watching the upcoming Central Economic Work Conference for clues on 2026 growth targets and stimulus plans. ^[31]
BoJ communications and the yen
- Any concrete sign that the BoJ will hike in December could force a significant re‑pricing in Japanese assets and global bond markets, given how deeply embedded yen-funded carry trades have become. ^[32]
Whether crypto stabilizes — or sparks wider contagion
- If Bitcoin’s slide stabilizes, equities may be able to look through the November drawdown.
- A deeper leg lower, especially combined with more outflows from crypto‑related ETFs, would reinforce the message that investors are de‑risking across the board. ^[33]

For now, the first trading day of December 2025 is sending a clear signal: markets still believe in lower interest rates ahead, but they are no longer willing to ignore the mounting evidence of a global industrial slowdown — and they are starting to demand a bit more proof that growth can weather the next round of data and policy decisions.