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Asian share markets edged higher on Monday, with Hong Kong’s tech sector taking the spotlight. Positive Japanese economic growth contrasted with a disappointing U.S. retail sales report, helping lift the yen against the dollar.
Geopolitics remained in focus with reports that talks on the Russian-Ukraine conflict will begin in Saudi Arabia this week, though the participants are not entirely clear, News.Az reports, citing Reuters.
The imminent threat of reciprocal U.S. tariffs has receded until April, but the risk that they might include levies based on value added taxes in other countries was a major worry.
The Financial Times reported on Sunday that the European Commission would explore tough import limits on certain foods made to different standards in an effort to protect its farmers, echoing President Donald Trump’s reciprocal trade policy.
For now, investors were just relieved that major tariffs had not already been introduced and MSCI’s broadest index of Asia-Pacific shares outside Japan firmed 0.34%.
Tokyo’s Nikkei tab ticked marginally higher after Japan reported surprisingly strong economic growth of an annualised 2.8% for the fourth quarter. The gains were limited by a further rise in the yen to 151.65 per dollar.
South Korean shares added 0.6% and Taiwan’s rallied 1.5%.
Chinese blue chips were 0.06% lower, with recent moves led by the Hong Kong market which
jumped 7% last week on optimism the Chinese firms could deliver low cost versions of AI to compete with the West.
The rush was underpinned by a 24% surge in Alibaba on news it would partner with Apple to support iPhones’ artificial intelligence services offering in China.
Alibaba reports earnings on Thursday and options imply the share could move 7.5% in either direction on the results.
Goldman Sachs has raised its outlook for Chinese growth and stocks, arguing that widespread adoption of AI could raise earnings per share by 2.5% a year over the next decade. It would also lift the fair value of Chinese equity by 15% to 20% and attract $200 billion of fund inflows.
The pan-European STOXX 600 index has also been attracting global funds having climbed for eight straight weeks to be up 8% since the turn of the year.
EUROSTOXX 50 futures held steady on Monday, while DAX futures rose 0.08% and FTSE futures gained 0.04%.
A holiday in U.S. markets made for thin trading, though the S&P 500 futures still rose 0.2% and Nasdaq futures 0.3%. Wall Street was briefly fazed by the retail sales report on Friday but the S&P 500 ended the week up 1.5%, while the Nasdaq gained 2.6%.
Treasuries rallied on the soft sales numbers as markets swung back toward pricing in two Federal Reserve rate cuts this year rather than just one.
Minutes of the Fed’s last meeting are due on Wednesday and should offer some detail about the outlook for further easing, while there are at least six Fed officials due to speak.
Yields on 10-year Treasuries were holding at 4.478%, well off a top of 4.660% hit in the middle of last week.
The drop in yields undermined the dollar and left the index at 106.73 after a loss of 1.2% last week. The euro was firm at $1.0491 , having rallied 1.6% last week, and aiming to test resistance at $1.0533.
The pound held at $1.2590 ahead of a raft of UK data including employment, wages and consumer prices, which will impact market wagers on the timing of the next rate cut.
Bank of England Governor Andrew Bailey is due to speak this week and will no doubt be questioned on the outlook.
Central banks in Australia and New Zealand hold policy meetings this week and are both expected to cut interest rates, the former by 25 basis points and the latter by twice that.
News.Az
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