Stocks in Asia opened the week on a cautious note as investors avoided riskier bets following weak economic data that triggered a Wall Street selloff. The US dollar declined against major peers, particularly the euro.
Market Performance and Sentiment
Asian Stocks: Benchmarks in Hong Kong and mainland China, which have benefited from tech-sector gains this year, traded within a narrow range. A broader gauge of Asian equities edged lower after hitting a four-month high last Friday.
US and European Futures: US equity futures advanced, as did contracts on Germany’s benchmark index, following a victory for the conservative party in the country’s federal elections.
The surge in Chinese tech stocks, fueled by optimism over artificial intelligence, has helped offset concerns surrounding US tariffs and the Federal Reserve’s policy trajectory. Rising US inflation expectations—at their highest in nearly three decades—also added to market caution.
“People have underestimated China’s innovation power, and the market remains under-owned by foreign investors,” said Virginie Maisonneuve, global chief investment officer at Allianz Global Investors. “We could see increased global fund allocations into China, especially in tech.”
Chinese tech shares have outperformed this year, supported by optimism around AI leader DeepSeek and Chinese President Xi Jinping’s meetings with business leaders, including Alibaba co-founder Jack Ma. Meanwhile, the euro area’s leading blue-chip index has gained nearly 12%, outpacing the S&P 500.
Key Market Events and Volatility Risks
Nvidia Earnings: One of the week’s most anticipated events is Nvidia’s earnings report on Wednesday. Investors have increased bets on market volatility ahead of the results, which could trigger major movements.
Treasury Futures: US Treasury futures slipped, though there was no cash Treasuries trading in Asia due to a public holiday in Japan.
Dollar Weakness: A gauge of the dollar softened in early Asian trading, while the euro gained 0.5% after German conservative leader Friedrich Merz vowed to swiftly form a new government following Sunday’s election.
Tariff Tensions and US-China Relations
Trade tensions remain in focus as Chinese Vice Premier He Lifeng voiced “serious concern” over President Donald Trump’s 10% tariff hike on Chinese goods during a call with US Treasury Secretary Scott Bessent, according to China Central Television.
The Trump administration is also pressuring Mexico to impose tariffs on Chinese imports to avoid US duties, sources said. Meanwhile, Trump directed the Committee on Foreign Investment in the US to limit Chinese investments in strategic sectors such as technology and energy, escalating tensions between the world’s two largest economies.
Corporate and Commodity News
Berkshire Hathaway: Warren Buffett’s firm aims to gradually increase its stake in Japan’s five largest trading houses, according to his annual shareholder letter.
Oil Prices: Crude oil remained under pressure as expectations of increased Iraqi supply weighed on the market.
Gold: The metal hovered near last week’s all-time high, supported by weak economic data and rising inflation expectations, which bolstered demand for safe-haven assets.
With global markets on edge over inflation, trade tensions, and upcoming corporate earnings, investors remain vigilant for signals that could shape the next major market move.
