Asian markets update: Stocks remain steady as dollar retreats; Tencent surges on AI expansion

Asian markets remained muted on Monday as a Wall Street holiday kept trading volumes low, while the US dollar weakened following disappointing retail sales data.

Meanwhile, Tencent shares surged after announcing AI-related advancements in its Weixin messaging app.

Investors kept a cautious stance as geopolitical tensions remained in focus, with reports suggesting that Russia-Ukraine peace talks could begin in Saudi Arabia this week.

Additionally, uncertainty over potential US tariffs on foreign goods continues to weigh on sentiment, particularly concerns that levies could be based on value-added tax structures in other countries.

Despite these risks, Asia’s stock performance remained stable.

MSCI’s broadest index of Asia-Pacific shares edged up 0.1%, while Japan’s Nikkei was flat, reacting to a stronger yen.

South Korea’s markets gained 0.2%, and Hong Kong stocks continued their rally, fueled by optimism over China’s AI sector.

Tencent jumps as China’s AI sector gains momentum

The standout performer in the region was Tencent, whose shares jumped 6.6% after announcing that its Weixin messaging app had begun beta testing with Deepseek, a rising AI startup in China.

Tencent’s stock opened at HK$506, its highest level since July 2021.

Hong Kong’s Hang Seng Index gained 0.6%, while the Hang Seng Tech Index rose 1.3%, extending last week’s 7% rally.

Alibaba, which soared 24% last week following its AI partnership with Apple, is set to report earnings on Thursday, with market expectations of a 7.5% swing in either direction post-results.

Dollar weakens as markets eye Fed rate cuts

The US dollar slipped as weak retail sales data revived bets that the Federal Reserve could cut rates twice this year.

The dollar index stood at 106.84, marking a 1.2% decline last week.

Meanwhile, the euro remained steady at $1.0485, while the Japanese yen strengthened to 152.02 per dollar after Japan reported stronger-than-expected GDP growth of 2.8% in Q4.

Treasuries rallied, with the 10-year yield holding at 4.478%, well below last week’s high of 4.660%.

Markets will closely watch the Fed minutes release on Wednesday and speeches from at least six Federal Reserve officials for further cues on monetary policy direction.

Commodity markets: Gold shines, oil slips

Gold prices hovered near record highs at $2,879 per ounce, extending a seven-week winning streak as investors sought safe-haven assets.

Meanwhile, oil prices declined on Ukraine peace talks speculation, which could lead to eased Russian supply restrictions.

Brent crude fell 36 cents to $74.38 per barrel, while US crude dropped 42 cents to $70.32 per barrel.

Upcoming central bank decisions and key data

This week, central banks in Australia and New Zealand are expected to cut interest rates, with the Reserve Bank of Australia likely reducing rates by 25 basis points, while New Zealand’s central bank could opt for a 50-basis-point cut.

In the UK, key economic indicators—including employment, wage growth, and inflation data—will influence expectations for the Bank of England’s next move. Governor Andrew Bailey is also scheduled to speak, which could provide further insights into the policy outlook.

As global markets navigate monetary policy shifts and trade uncertainties, investors remain focused on corporate earnings and central bank actions for direction.

The post Asian markets update: Stocks remain steady as dollar retreats; Tencent surges on AI expansion appeared first on Invezz