Jamie McGeever
(Reuters) – A look at the day ahead in Asian markets.
A big week for global markets kicks off in Asia on Monday, with investors still reeling from a blizzard of headlines surrounding US President Donald Trump’s likely economic plan as he tries to gauge whether the narrative of “American exceptionalism” will lose its luster.
The dollar fell 1.8% last week, its worst week since November 2023. If the greenback is consolidating, it shouldn’t really be a surprise – it hit a two-year high earlier this month and the hedge fund’s net “long” position was the largest in nine years.
The dollar and US stocks are closely linked, lifted by a huge wave of global capital inflows as investors bet heavily on US AI, Tech, Growth and Boom Returns.
But if the slide in the dollar is a sign that the flame of “American exceptionalism” is beginning to flicker, is Wall Street also set for a cooling off period?
The S&P 500 hit a new high last week and the NASDAQ came close. Index levels are at historic highs, valuations are stretched, and there are big risk events this week in the form of the Fed policy meeting and “Big Tech” earnings.
Us tech overview boosts as cracks from Chinese AI startup called DeepSeek Spread. DeepSeek recently launched a free, open source AI model that it claims is at least equal to more established models like chatgpt on many levels, but built at a fraction of the cost.
It’s early days, but if this shines a critical light on the huge amounts of money tech companies have spent on AI, Wall Street could swing.
Monday’s Asian calendar is dominated by China’s ‘official’ official sector to buy managers to buy the index for January.
A Reuters poll suggests manufacturing PMI will be unchanged from the previous month at 50.1. On the one hand, it would represent the fourth expansion reflector in the sector. It would also indicate almost no growth for the second month in a row.
Data on Friday showed that profits at China’s state-owned companies virtually evaporated last year, up just 0.4% on the previous year. Broader figures from the industrial sector are due this week, possibly as early as Monday, and are expected to confirm that 2024 was the worst year in decades.
Investors will make their verdict for the second day on Friday on a rate hike by the Bank of Japan. The initial point seems to have been that it was “hawks,” but Japanese money markets are still pricing in just another 25 basis points of tightening this year, unchanged from pre-Friday levels. This suggests that the BOJ’s guidance is actually quite neutral, and Japanese stock futures point to a strong rally on Monday.
