Asia shares rise on tech gains, Japan's yen boosted by strong GDP growth

Asia share markets crept higher on Monday as Hong Kong's tech sector stole the limelight, while upbeat Japanese economic growth contrasted with a weak US retail sales report to lift the yen on the dollar.

Geopolitics remained in focus with reports that talks on the Russian-Ukraine conflict will begin in Saudi Arabia this week, though the participants are not entirely clear.

The imminent threat of reciprocal US tariffs has receded until April, but the risk that they might include levies based on value added taxes in other countries was a major worry.  READ: Stock Market LIVE Updates

"The prospect, however misguided, of the US levying an additional 20 per cent tariff on all EU imports, on top of whatever else it deems appropriate, and to varying degrees on all other countries who have VAT regimes is a truly terrifying prospect in terms of the implications for global growth," said Ray Attrill, head of FX research at National Australia Bank.

 

The Financial Times reported on Sunday that the European Commission would explore tough import limits on certain foods made to different standards in an effort to protect its farmers, echoing President Donald Trump's reciprocal trade policy.

For now, investors were just relieved that major tariffs had not already been introduced and MSCI's broadest index of Asia-Pacific shares outside Japan firmed 0.3 per cent.

Tokyo's Nikkei edged up 0.1 per cent after Japan reported surprisingly strong economic growth of an annualised 2.8 per cent for the fourth quarter. The gains were limited by a further rise in the yen to 151.80 per dollar.

South Korean shares added 0.8 per cent and Taiwan's rallied 1.2 per cent.

Chinese blue chips were flat, with recent moves led by the Hong Kong market which jumped 7 per cent last week on optimism the Chinese firms could deliver low cost versions of AI to compete with the West.

The rush was underpinned by a 24 per cent jump in Alibaba on news it would partner with Apple to support iPhones' artificial intelligence services offering in China.

Alibaba reports earnings on Thursday and options imply the share could move 7.5 per cent in either direction on the results.

Goldman Sachs has raised its outlook for Chinese growth and stocks, arguing that widespread adoption of AI could raise earnings per share by 2.5 per cent a year over the next decade. It would also lift the fair value of Chinese equity by 15 per cent to 20 per cent and attract $200 billion of fund inflows.

The pan-European STOXX 600 index has also been attracting global funds having climbed for eight straight weeks to be up 8 per cent since the turn of the year.

EUROSTOXX 50 futures held steady, while DAX futures rose 0.2 per cent and FTSE futures eased 0.1 per cent.

Dollar not so exceptional

A holiday in US markets made for a quiet start, leaving S&P 500 futures and Nasdaq futures near flat.

Wall Street was briefly fazed by the retail sales report on Friday but the S&P 500 still ended the week up 1.5 per cent, while the Nasdaq gained 2.6 per cent. [.N]

Treasuries rallied on the soft sales numbers as markets swung back toward pricing in two Federal Reserve rate cuts this year rather than just one.

Minutes of the Fed's last meeting are due on Wednesday and should offer some detail about the outlook for further easing, while there are at least six Fed officials due to speak.

Yields on 10-year Treasuries were holding at 4.478 per cent, well off a top of 4.660 per cent hit in the middle of last week.

The drop in yields undermined the dollar and left the index at 106.84 after a loss of 1.2 per cent last week. The euro was firm at $1.0498, having rallied 1.6 per cent last week, and aiming to test resistance at $1.0533.

The pound held at $1.2592 ahead of a raft of UK data including employment, wages and consumer prices, which will impact market wagers on the timing of the next rate cut.

Bank of England Governor Andrew Bailey is due to speak this week and will no doubt be questioned on the outlook.

Central banks in Australia and New Zealand hold policy meetings this week and are both expected to cut interest rates, the former by 25 basis points and the latter by twice that.

In commodity markets, gold was not far from record highs at $2,894 an ounce having rallied for seven weeks straight. [GOL/]

Oil has had a tougher time as the prospect of peace talks on Ukraine could lead to greater supply should sanctions on Russian output be relaxed. [O/R]

Brent slipped another 12 cents to $74.62 a barrel, while US crude fell 19 cents to $70.55 per barrel.