Global Markets: 5 key things to watch out for this week

World markets are heading into another eventful week, with the US-China summit, rising Treasury yields, the UN General Assembly, the debate over AI risks and Indonesia's central bank decision likely to shape investor sentiment. (Source: Reuters)

Chinese President Xi Jinping is scheduled to visit Washington for a three-day state visit and meet US President Donald Trump. Markets will closely watch the talks for signals on trade and economic ties, Taiwan policy, the US-China AI race and broader geopolitical tensions. Trump is also expected to host a White House state dinner, with leading technology executives, including Nvidia CEO Jensen Huang, among the expected guests. The meeting comes at a particularly sensitive time for relations between the world's two largest economies.

Flash US manufacturing PMI data will give investors another indication of the strength of the US economy. The 10-year US Treasury yield has recently tested the psychologically important 5% level, keeping global borrowing costs and currency markets in focus.Investors will assess whether stronger economic data keeps yields elevated and whether higher borrowing costs eventually weigh on equities and other risk assets. The dollar's response to the rise in Treasury yields will also remain important.

The 81st UN General Assembly High-Level Week begins against a backdrop of geopolitical tensions and growing divisions between major powers. Discussions are expected to focus heavily on the conflicts in Ukraine and the Middle East and their broader economic consequences. AI governance, climate change and sovereign debt will also feature prominently. The process of selecting the next UN Secretary-General is expected to intensify, adding another layer of geopolitical competition to the gathering.

The debate over the pace and safety of artificial intelligence development is set to remain a major market theme. Recent warnings from leading AI executives about potential risks have raised questions over whether governments and companies should slow the development of increasingly powerful systems. For investors, the focus will be on whether concerns about AI safety translate into changes in regulation, semiconductor demand or hyperscaler capital spending. Markets will also look for evidence that the huge investment in AI infrastructure can continue at its current pace.

Indonesia's central bank will announce its latest interest-rate decision on Wednesday. The decision is expected to be either a hold or a small rate cut, with investors also watching the implications of recent changes in the country's economic leadership. The policy decision comes after the replacement of Finance Minister Purbaya Yudhi Sadewa and amid concerns over policymaking, fiscal policy and investor confidence. Markets will also monitor developments around Indonesia's equity-market classification.

US-China relations will be a major focus as Trump and Xi meet in Washington, while the 10-year Treasury yield and fresh US economic data could determine the direction of global bond markets and currencies.
The UN General Assembly will bring geopolitical and economic issues into focus, while the AI debate could influence technology stocks and capital spending expectations. In Indonesia, the central bank's rate decision will provide another important signal for emerging-market investors.
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