Morning Bid: Dollar, tech and tariff delays fuel rotation plays
By Jamie McGeever
(Reuters) - A look at the day ahead in Asian markets.
Asian markets go into the new week on the front foot, supported by the weaker dollar, an ongoing rebound in China, and a wider switch into global assets as investors rotate out of the 'U.S. exceptionalism' trades that served them so well last year.
The main calendar event is fourth-quarter GDP data from Japan. Economists are expecting annualized growth of 1.0%, according to a Reuters poll, slightly less than the revised 1.2% expansion in July-September, with business investment making up for weak consumption.
The dollar is at a two-month low, dragged down by the delay in the Trump administration's tariff proposals actually being implemented. President Donald Trump's ultimate tariff destination may not have changed, but the journey is taking longer than many analysts had perhaps expected, and that is giving some relief to markets and weighing on the dollar.
The dollar is down four days in a row, its longest losing streak since August. Most key emerging market currencies are now up against the greenback year-to-date, apart from the Indian rupee.
Emerging and Asian assets more broadly are getting a lift. The MSCI Asia ex-Japan index has rebounded 8% in the last month, an impressive move but not a patch on Hong Kong stocks - the Hang Seng is up 20% in the last month and the Hang Seng tech index is up 30%.
Bank of America analysts note that since Trump's inauguration on January 20, shares in China's big tech 'BATX' firms - Baidu, Alibaba, Tencent and Xiaomi - are up 22%, while America's 'Magnificent Seven' are up 0%.
WisdomTree's head of equities Jeff Weniger notes that China's 'Terrific Ten' group of top tech stocks is now "crushing" the 'Magnificent Seven. How much juice is left in this move?
If DeepSeek shows that China is very much in the global AI race, this trend could continue - Chinese stocks are extremely undervalued relative to their U.S. peers, and as BofA analysts note, 'BATX' market cap is currently only $1 trillion compared with the Mag Seven's $17 trillion.
Elsewhere in the tech/AI space, Taiwan Semiconductor Manufacturing Co and Broadcom are each eyeing potential deals that would break U.S. chipmaking icon Intel in two, the Wall Street Journal reported on Saturday.
Meanwhile, fast-moving geopolitical developments around the Russia-Ukraine war are back on investors' radar. French President Emmanuel Macron will host an emergency European summit on Monday after U.S. officials suggested Europe would have no role in any talks on ending the conflict, a peace process that will seemingly be conducted between the U.S. and Russia.
Leaving aside the politics of it all, the prospect of even an imperfect peace is pushing oil and the dollar lower, and lifting European stocks. Other risk markets, like Asian and emerging assets, should benefit too.
Here are key developments that could provide more direction to Asian markets on Monday:
- Japan GDP (Q4)
- Thailand GDP (Q4)
- Indonesia trade (January)
(By Jamie McGeever, editing by Diane Craft)
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