Global Markets Risk Aversion Analysis: December 1, 2025

On December 1, 2025, global markets experienced a risk-off sentiment shift triggered by comments from Bank of Japan (BOJ) Governor Kazuo Ueda, which fueled concerns about potential policy tightening, combined with weak Asian manufacturing data [1]. Japanese Government Bonds (JGBs) saw a selloff, with the 2-year yield hitting 1% (a 17-year high) [3], leading to a spillover effect on US Treasuries—where the 10-year yield rose 3 basis points to 4.04% [3].

Equity markets reacted negatively: Japan’s Nikkei 225 declined ~1.9% due to a contractionary manufacturing PMI (48.7) [2], while US futures (S&P500 -0.5%, Nasdaq -0.7%) signaled cautious trading ahead [2]. Sector performance was mixed: Energy led gains (+1.17%) amid rising oil prices (> $1/bbl) [2][0], while Healthcare (-0.016%) and Financial Services (-0.005%) underperformed [0]. Asian markets showed divergence: Hang Seng (+0.4%) and Shanghai Composite (+0.7%) gained, contrasting with Nikkei’s drop [2].

Cross-domain correlations emerged: BOJ policy expectations (potential yield curve control adjustment) impacted global bond markets and equities. Defensive sectors (Energy, Consumer Defensive) outperformed in risk-off conditions, while rate-sensitive sectors (Financials) faced pressure from rising yields. Mixed Asian markets highlighted regional disparities—weak Japanese manufacturing vs. relative stability in China/Hong Kong.

• Global bond volatility: The JGB selloff could spill over to other developed markets if the BOJ tightens policy; investors should monitor BOJ announcements closely [3].
• Manufacturing slowdown: Persistent contraction in Japanese manufacturing may signal broader global economic risks [2].

• Energy sector: Short-term gains from rising oil prices present opportunities for investors exposed to this sector [2][0].

Key metrics include:

• US 10-year Treasury yield:4.04% (+3 bps) [3]
• Nikkei225:-1.9% [2]
• S&P500 futures:-0.5% [2]
• Energy sector:+1.17% [0]

Affected instruments: JGBs, US Treasuries, Nikkei225, energy sector stocks. Decision-makers should monitor BOJ policy meetings, US manufacturing data, and bond yield movements for further insights.