By Jamie McGeever
(Reuters) – A have a look at the day forward in Asian markets.
An enormous week for world markets kicks off in Asia on Monday with traders nonetheless navigating the blizzard of headlines round U.S. President Donald Trump’s seemingly financial agenda, whereas making an attempt to gauge whether or not the “U.S. exceptionalism” narrative could also be dropping its luster.
The greenback fell 1.8% final week, its worst week since November 2023. If the dollar is consolidating, it should not actually be a shock – it hit a two-year excessive earlier this month and hedge fund internet ‘lengthy’ place was the most important in 9 years.
The greenback and U.S. shares have been intently correlated, lifted by the large wave of worldwide capital inflows as traders guess closely on the American AI, tech, development and returns growth.
But when the greenback’s slide is an indication that the “U.S. exceptionalism” flame is beginning to flicker, is Wall Avenue primed for a cooling off interval too?
The S&P 500 hit a brand new excessive final week and the Nasdaq got here shut. Index ranges are traditionally excessive, valuations are stretched, and large occasion threat looms this week within the form of the Fed’s coverage assembly and ‘Massive Tech’ earnings.
Scrutiny on U.S. tech is intensifying as ripples from a Chinese language AI startup referred to as DeepSeek unfold. DeepSeek just lately launched a free, open-source AI mannequin it claims is not less than the equal of extra established fashions like ChatGPT on many ranges, however constructed at a fraction of the associated fee.
It is early days but when this shines a essential gentle on the large sums being spent on AI by U.S. tech corporations, Wall Avenue might wobble.
The Asian calendar on Monday is dominated by China’s ‘official’ manufacturing and repair sector buying managers index stories for January.
A Reuters ballot suggests the manufacturing PMI will probably be unchanged from the earlier month at 50.1. On the one hand, that might characterize the fourth straight month of growth within the sector. It might additionally point out virtually no development in any respect for the second month in a row.
Information on Friday confirmed Chinese language state-owned corporations’ earnings final yr nearly evaporated, rising solely 0.4% on the earlier yr. Wider industrial sector earnings figures are due this week, maybe as early as Monday, and are anticipated to substantiate that 2024 was the worst yr in many years.
Buyers will give their second day verdict on Friday’s Financial institution of Japan’s fee hike. The preliminary take appeared to be that it was a ‘hawkish hike’, however Japanese cash markets are nonetheless pricing in solely one other 25 foundation factors of tightening this yr, unchanged from pre-Friday ranges. This means BOJ steerage was really fairly impartial, and Japanese inventory futures are pointing to a powerful rise on Monday.