By Lawrence Delevingne and Kevin Buckland
TOKYO/BOSTON (Reuters) – Technology stocks led gains in Asia-Pacific markets on Wednesday, tracking advances on Wall Street overnight as investor angst ebbed over the emergence of a low-cost Chinese AI model that some see rivalling U.S. dominance of the industry.
The dollar remained firm after traders rotated back into the currency from safe-haven peers like the Japanese yen, while also getting a boost from fresh tariff warnings from the Donald Trump administration.
Trading was thinned in Asia by Lunar New Year holidays that shuttered exchanges in mainland China and Hong Kong, as well as Taiwan, Singapore and South Korea.
Japan’s Nikkei share average rose 0.5% as of 0055 GMT, putting it on track to snap three straight days of declines.
Australia’s stock benchmark added 0.8%, with a subindex of tech names climbing 2.2%.
Futures for the U.S. S&P 500 and Nasdaq Composite were each down about 0.1%, following respective rallies of 0.9% and 2% for the cash indexes overnight.
The tech heavy Nasdaq had tumbled more than 3% in the previous session, after the spiking popularity of Chinese startup DeepSeek’s app called into question sky-high valuations for U.S. chipmaker Nvidia and others at the forefront of the AI revolution.
“There appeared to be a level of relief in the rally, mostly because of a forming consensus that while ostensibly impressive, DeepSeek will either lack the scalability to truly disrupt the AI space and, if anything, the company’s low-cost model will actually increase demand for GPUs,” said Kyle Rodda, senior financial market analyst at Capital.com.
Attention now turns to mega-cap tech company earnings coming up on Wall Street later in the day from Facebook owner Meta Platforms, Microsoft and Tesla. Executives can expect to be asked whether they still plan to spend so much on computing power.
The Federal Reserve also announces a policy decision, although an on-hold outcome is widely expected.
The dollar index, which measures the currency against six major rivals, was flat at 107.91 following two days of consecutive 0.2% advances. It ended last week with a 0.6% tumble, as traders judged Trump’s tariffs would be milder than expected following threats of huge levies during the election.
On Tuesday though, the White House reaffirmed plans to hit Canada and Mexico with tariffs on Saturday – which Trump previously said would be 25% – and said the President was also still weighing fresh tariffs on China.
The Mexican peso edged down slightly to 20.5440 per dollar, while Canada’s loonie was flat at C$1.4402 versus the greenback.
The yuan was little changed in offshore trading at 7.2763 per dollar.
The euro was flat at $1.0432. The yen eased about 0.1% to 155.66 per dollar.
The Australian dollar dipped after a softer-than-expected reading on consumer inflation opened the door to an interest rate cut next month. The Aussie sank 0.4% to $0.6229.
Oil prices held on to Tuesday’s gains, with Brent crude oil futures flat at $77.47 per barrel after settling up 0.5% overnight. U.S. West Texas Intermediate crude futures edged up about 0.1% to $73.82 per barrel, building on Tuesday’s 0.8% rise.
(Reporting by Lawrence Delevingne in Boston and Alun John in London. Additional reporting by Sinead Cruise. Editing by Deepa Babington and Sam Holmes)
