Japan’s current account surplus decreased sharply to JPY 2,372.3 billion in September 2026 from JPY 4,375.8 billion in the same month a year earlier, falling short of market expectations of a surplus of JPY 3,354.4 billion. The primary income surplus shrank to JPY 3,553.5 billion from JPY 4,874.8 billion, while the services deficit widened to JPY 456.9 billion from JPY 254.1 billion and the secondary income deficit increased to JPY 536.8 billion from JPY 491.5 billion. Meanwhile, the goods account swung to a JPY 187.5 billion deficit from a JPY 246.6 billion surplus, as imports rose 17.8%, outpacing 12.8% export growth. Exports benefited from strong AI-related electronics demand, while imports were partly driven by higher crude oil purchases. In the first half of fiscal 2026, Japan’s trade surplus was little changed at JPY 17.15 trillion, compared with JPY 17.22 trillion a year earlier.

Asian equity markets advanced on Tuesday, following overnight gains on Wall Street as technology shares rebounded from last week’s selloff amid improving sentiment toward the artificial intelligence sector. Tech stocks faced significant selling pressure last week after Democrats secured a sweeping victory in the US midterm elections, raising concerns over tighter AI regulations and a potential slowdown in data center expansion. Meanwhile, oil prices declined after President Donald Trump voiced optimism that the conflict in Iran could be nearing an end following discussions with Qatar’s prime minister, helping ease concerns over inflationary pressures. South Korea’s Kospi Index, a key indicator of AI-related market sentiment, surged more than 5%, leading gains across the region. Japan’s technology-heavy Nikkei 225 also advanced nearly 3%.

UK retail sales rose by 1.1% year-on-year on a like-for-like basis in October 2026, slightly below forecasts of 1.2% but faster than the previous month’s 1.0% increase and marking the sharpest rise since June. Total retail sales increased by 1.5%, accelerating from September’s 1.3% growth. Food sales rose 3.2%, while non-food sales remained flat, as consumers stayed cautious ahead of the festive shopping season and Black Friday promotions. Meanwhile, Barclays’ measure of consumer card spending increased by 2.3% year-on-year, up from 2.0% in September and marking its strongest growth since July 2025. Essential spending climbed by 3.1%, driven by a 22.7% surge in fuel spending, while non-essential spending rose by 1.9%. Entertainment spending recorded its strongest month since September 2024, following Glastonbury ticket sales. However, consumer confidence showed its least optimism about the UK economy since April, amid higher household costs and uncertainty ahead of the upcoming budget.

Crude oil traded near $86 per barrel on Tuesday after falling more than 4% in the previous session, reaching its lowest level since late August amid diplomatic efforts to end the Middle East conflict. President Donald Trump expressed optimism about a possible resolution, citing “momentum toward an end” to the conflict following his meeting with Qatar’s prime minister. Meanwhile, Congressional Democrats are considering using the Dec. 11 government shutdown deadline to pressure Trump into ending the war. However, tensions remain elevated as US forces reportedly launched another strike on Iran’s Qeshm Island, while US Secretary of State Marco Rubio tempered expectations for progress in negotiations. Tanker vessels also remained targets of attacks in the Strait of Hormuz, while clashes involving Saudi Arabia and Iran-backed Houthis continued. Elsewhere, investors are awaiting monthly oil market reports from the US EIA, OPEC and IEA for further insights into global supply and demand.

Japan’s household spending dropped 6.8% year-on-year in September 2026, deepening from August’s decline and market expectations of a 3.1% drop. It marked the tenth consecutive month of contraction and the steepest fall since September 2020, highlighting the impact of persistent inflation and higher borrowing costs. Spending weakened across most categories, including food (-2.5% vs -1.4% in August), utilities (-10.5% vs -5.2%), healthcare (-7.6% vs -1.9%), education (-23.5% vs -12.3%), furniture and household goods (-6.4% vs -6.3%), and culture and recreation (-8.7% vs -4.3%). Transport and communication spending also plunged (-9.1% vs 0.2%), while clothing declined more slowly (-3.6% vs -8.7%). Meanwhile, housing expenditure was flat after falling 5.8% in August. On a seasonally adjusted monthly basis, spending fell 2.8%, reversing August’s 0.1% increase and missing expectations of a 0.3% rise, marking its first decline in three months.

Median US inflation expectations for the year ahead were steady at 3.9% in October 2026, the same as in September, and holding at 2023-highs, according to the Federal Reserve Bank of New York’s Survey of Consumer Expectations. Median year-ahead expected price changes decreased by 0.6 pp to 4.2% for gas and were unchanged at 5.5% for food. In contrast, price changes increased by 0.1 pp to 9.3% for the cost of medical care, by 0.1 pp to 7.6% for the cost of college education, and by 0.9 pp to 7.7% for rent. Median home price growth expectations were unchanged at 3%, just below its 12-month trailing average of 3.1%. Meanwhile, expectations for the three-year and five-year horizons were also steady at 3.3% and 3% respectively. Elsewhere, earnings growth expectations remained unchanged at 2.6%, unemployment expectations rose by 1.4 pp to 45.3%, its highest reading since April 2020 and expected growth in household income declined by 0.1 pp to 3%.