Asian stocks experienced a muted start to the week, with investors adopting a cautious stance following weak economic data that triggered a selloff on Wall Street. The dollar weakened against major currencies, especially the euro. Benchmarks in Hong Kong and mainland China, which had benefited from a surge in technology stocks earlier this year, remained within a narrow trading range. After reaching a four-month high on Friday, a key gauge of Asian equities dipped slightly. US equity index futures saw a slight uptick, while contracts on Germany’s benchmark stock index also rose following the victory of the conservative party in the country’s federal elections.
The burgeoning prospects of artificial intelligence have bolstered Chinese tech stocks, offsetting concerns about US tariffs and shifting market expectations surrounding potential Federal Reserve policy easing. Recent data revealed a significant rise in US inflation expectations, marking the highest level in nearly 30 years.
Virginie Maisonneuve, Global CIO for Equities at Allianz Global Investors, noted, “The power of innovation in China has been underestimated, and the country remains significantly under-owned by foreign investors. We can expect global funds to increasingly allocate capital to China, particularly within the tech sector.”
Driven by optimism surrounding AI and a high-profile meeting between Chinese President Xi Jinping and leading business figures, including Alibaba’s Jack Ma, Chinese technology stocks have soared this year. During the same period, Europe’s leading blue-chip index gained almost 12%, outperforming the S&P 500.
This week’s focus will be on Nvidia Corp.’s earnings report, due Wednesday. Investors are anticipating a return of market volatility, with Nvidia’s results being the first in a series of potential market-moving events.
Treasury futures dropped on Monday, and with Japan’s markets closed for a holiday, there was no cash trading of US Treasuries in Asia.
In currency markets, the dollar weakened early in Asian trading, while the euro strengthened by 0.5% against the greenback. The euro’s rally followed comments from Friedrich Merz, the leader of Germany’s conservative party, who promised swift action to form a new government after his party’s success in Sunday’s federal election.
In China, shares of diagnostic kit and vaccine manufacturers saw an uptick after researchers reported the discovery of a new coronavirus in bats, which uses the same cellular entry mechanism as the virus responsible for COVID-19.
Tensions between the US and China were also in the spotlight. Chinese Vice Premier He Lifeng expressed “serious concern” over President Trump’s decision to increase tariffs on Chinese goods during a call with Treasury Secretary Scott Bessent. The US Treasury echoed concerns over various issues, including economic imbalances with China.
Meanwhile, the Trump administration has reportedly advised Mexico to impose its own tariffs on Chinese imports in an effort to mitigate the risk of US tariffs. In a related development, the US government is moving to restrict Chinese investments in critical US industries, including technology and energy, as part of a broader strategy to counter China’s economic influence.
In corporate news, Warren Buffett’s Berkshire Hathaway Inc. revealed plans to gradually increase its stake in Japan’s five largest trading houses, according to his annual letter to shareholders.
In commodity markets, oil prices faced downward pressure amid expectations of rising supply from Iraq. Gold prices remained near last week’s record high, supported by weaker-than-expected economic data and growing concerns about inflation, which have fueled demand for safe-haven assets.
Related topics:
GBP/USD Edges Lower Despite US Dollar Weakness
Yen Faces Pressure Amid Rising Long-Term Yields and Inflation Concerns
Crypto Today: Litecoin, Binance, and Solana Take Center Stage as Bitcoin Soars to $97K
