By Jamie McGeever
(Reuters) – A look at the day ahead in Asian markets.
Asian markets on Wednesday will be looking to claw back Tuesday’s broad losses but will face headwinds from a sluggish performance on Wall Street, higher U.S. bond yields and persistent nervousness around escalating global trade tensions.
In testimony to Congress, Fed Chair Jerome Powell stressed the U.S. central bank is in no rush to cut interest rates. His upbeat view of the economy and willingness to continue shrinking the Fed’s balance sheet weighed on U.S. equity and bond prices, which could temper risk appetite in Asia.
Deep uncertainty around the U.S. tariffs on steel and aluminum imports announced by President Donald Trump on Monday, and what lies next in the brewing global trade war, may also keep investors on the defensive.
This is partly being reflected in gold’s relentless rise to new highs within sight of $3,000 an ounce. Fear over the inflationary impact of a global trade war isn’t the only reason bullion is up 10% this year, but it’s a big one.
Japanese markets reopen after Tuesday’s National Day holiday, and if there’s a domestic driver for stocks on Wednesday it could be Softbank’s results.
The technology investment conglomerate is expected to post quarterly net profit of 234 billion yen ($1.54 billion) but analysts are keen to know whether the firm’s recent flurry of artificial intelligence-related investments will help or hurt its bottom line.
Softbank has agreed with OpenAI CEO Sam Altman to set up a joint venture in Japan, is committing $15 billion to the Stargate project, and has pledged to invest up to $100 billion in AI projects in the U.S. over four years.
This comes amid an extraordinarily volatile time in AI – China’s DeepSeek rocked world markets last month, and on Monday a consortium led by Elon Musk said it had offered $97.4 billion to buy the nonprofit that controls OpenAI.
U.S. tech stocks are holding their ground – the Nasdaq and ‘FAANG’ index are up 2% and 5% so far this year, respectively – but Asian tech stocks are flying – Hong Kong’s Hang Seng tech index is up 14% year to date.
Hedge funds have probably been active here. According to Goldman Sachs, they have been aggressive buyers of Chinese stocks this year, especially since the emergence of homegrown AI startup DeepSeek stoked investor enthusiasm.
And on Monday, a securities filing from billionaire hedge fund manager David Tepper’s Appaloosa Management showed that the firm substantially increased its holdings of Chinese tech giants Alibaba and JD in the fourth quarter of last year.
Remember, it was in response to Beijing’s initial economic stimulus and market support measures in September that Tepper said he would buy “everything” on China. He still seems just as bullish.
Here are key developments that could provide more direction to Asian markets on Wednesday:
– Softbank results (Q3)
– India inflation (January)
– India industrial production (December)
(By Jamie McGeever)
