Key Points

• Europe’s largest rare earth magnet plant: Neo’s new facility in Narva on Russia’s border is ramping up toward supplying roughly 10% of EU demand, signalling a strategic push to reduce dependence on Chinese critical minerals.
• Japanese government bond yields surge: Yields have climbed to their highest levels since the late 1990s–2000s, sharpening the Bank of Japan’s dilemma between continuing rate normalization and protecting growth in an already heavily indebted economy.
• Asia-Pacific equities rise: Markets mostly gained, led by a strong rally in Japan’s Nikkei, as weaker U.S. jobs data reinforced expectations of a Fed rate cut next week even while AI-linked U.S. tech names remain under pressure.
• India strengthens ties with Russia: India’s decision to host President Putin and target a rise in India-Russia trade to $100 billion by 2030 highlights New Delhi’s determination to deepen strategic and energy ties with Moscow despite steep U.S. tariffs and geopolitical scrutiny.

Europe Builds Rare Earths Foothold on Russia’s Border

Europe’s largest rare earths magnet plant, developed by Neo Performance Materials in Narva, Estonia, is ramping up output as the EU seeks to cut dependence on Chinese supply chains.

The facility aims to produce 2,000 metric tons of magnets this year, scaling toward 5,000 tons, potentially covering about 10% of EU demand in a market still dominated by China’s 90%-plus share of global magnet manufacturing.

Backed by EU funding and supply deals with major auto suppliers like Schaeffler and Bosch, the project highlights both Europe’s strategic push for resource security and the challenges of building cost-competitive, diversified capacity in a sensitive geopolitical location.

BOJ Squeezed Between Rising Yields and Persistent Inflation

Japanese government bond yields have climbed to their highest levels in more than 15 years, sharpening the Bank of Japan’s policy dilemma as it attempts to exit ultra-easy settings without destabilizing growth.

The 10-year JGB yield hit 1.92% on Thursday, with 20- and 30-year yields nearing 3% and above, reflecting mounting concerns over inflation that has stayed above the BOJ’s 2% target for 43 consecutive months and growing fiscal strain from record stimulus and a debt-to-GDP ratio near 230%.

While higher rates risk further yield spikes and heavier funding costs, a renewed shift to easing could weaken the yen and worsen imported inflation, leaving global investors braced for episodic volatility rather than a repeat of 2024’s carry-trade-driven market shock.

Asia Equities Track Wall Street on Fed Cut Optimism Despite Tech Drag

Asian markets were mostly higher on Thursday as softer U.S. labor data reinforced expectations of a Federal Reserve rate cut next week, lifting risk appetite across the region. Japan led gains, with the Nikkei 225 up 2.3% and Topix nearly 2%, driven by industrials and AI-linked names such as Fanuc and SoftBank, while chip-related stocks extended their rally on deal and partnership headlines.

Chinese and Hong Kong benchmarks posted modest advances, whereas South Korea’s Kospi and Kosdaq slipped and India’s indices were flat as the rupee hit fresh record lows.

Overnight in the U.S., AI-exposed mega-cap tech lagged, but broader indices still closed in positive territory as markets priced an almost 90% probability of imminent Fed easing.

India Deepens Russia Ties Despite U.S. Tariffs and Energy Pressure

India will host President Vladimir Putin on Dec. 4–5 for the 23rd India-Russia summit, underscoring New Delhi’s intent to preserve a “special and privileged” partnership with Moscow despite punitive U.S. tariffs on Indian exports linked to Russian oil purchases.

The two sides aim to lift bilateral trade from $68.7 billion in FY 2025 to $100 billion by 2030, broadening flows beyond discounted crude into machinery, chemicals, food, pharmaceuticals, defense and civil nuclear cooperation.

For markets, the visit highlights India’s balancing act between strategic energy security, defense diversification away from Russia, and maintaining access to U.S. trade and capital.

Conclusion

Global markets are navigating a complex mix of opportunity and risk as 2025 draws to a close.

Europe is taking tangible steps to reduce its dependence on Chinese critical minerals, while Japan confronts the constraints of normalizing policy in a highly indebted economy.

In Asia, risk assets remain broadly supported by expectations of imminent Fed easing, even as leadership rotates within the tech complex.

India’s deepening engagement with Russia, despite U.S. pressure, underlines a more fragmented geopolitical landscape that will increasingly shape trade flows, commodity pricing and capital allocation in 2026.

Selectivity, risk management and time horizons matter more.

Investment Insights

• Strategic commodities: Europe’s push to localize rare earth magnet production on NATO’s eastern flank highlights how security and supply chains are converging. Long-term capital is likely to reward upstream and midstream projects that credibly reduce dependence on China.
• Japan’s policy squeeze: Rising JGB yields and a highly indebted sovereign leave the BOJ with limited room for error. A misstep could reprice global bond markets and yen-funded carry trades, arguing for prudent duration and FX risk management.
• Rate-cut optimism in Asia: Asian equities remain highly sensitive to U.S. labor data and Fed expectations. Investors should distinguish between structural beneficiaries of AI and robotics and markets merely riding the liquidity tide.
• India’s multi-alignment: India’s decision to deepen ties with Russia despite punitive U.S. tariffs signals a more multipolar trade and energy map. Over time, this could re-route energy flows and defence spending, creating opportunities in logistics, alternative suppliers and India’s own industrial and export base.

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