NEW YORK: Asian stocks struggled for direction as traders navigate increasing tensions between the US and European Union and looming central bank monetary policy decisions.
Australian shares dipped while Japan swung between gains and losses. Futures in Hong Kong also pointed to an early drop. The dollar was little changed. Treasury futures dipped with cash trading closed globally due to Presidents’ Day in the US.
The tepid start to the week comes as investors monitor a ratcheting up in tensions between the US and Europe after President Donald Trump’s tariff plans sparked threats of retaliation. Vice President JD Vance attacked longstanding European allies at a security conference at the weekend while plans to negotiate an end to the war in Ukraine have left the bloc on the sidelines. Those tensions prompted a drop in German and French bond futures.
"The lack of visibility given what still seems to be an unpredictable US administration means that short-term market participants do not have much conviction,” said Marc Chandler, chief market strategist at Bannockburn Global Forex. "The bilateral talks between the US and Russia over Ukraine is a bit like the Suez Crisis (1956) where US interests diverged starkly from the UK and France.”
Investors will also be looking to China stocks after a gauge of US-listed mainland shares climbed 2.3 per cent on Friday amid a euphoria over artificial intelligence companies. A potential meeting this week between President Xi Jinping and e-commerce icon Jack Ma could be the next catalyst to extend the rally in China’s stocks.
Meanwhile, Michael Burry had rolled back on some of his investments in Chinese tech stocks just before DeepSeek’s breakthrough in artificial intelligence reignited a $1.3 trillion rally in the country’s shares. Goldman Sachs raised its targets for Chinese equity benchmarks.
A raft of policy decisions from Wellington to London are also due this week. The Reserve Bank of Australia is expected to begin its long awaited interest rate cut cycle on Tuesday (Feb 18), while New Zealand’s central bank is likely to continue its rapid easing to support a sluggish economy on Wednesday.
"We expect the RBA to finally start its easing cycle, as inflation has been easing meaningfully,” Societe Generale SA economists including Wei Yao wrote in a note.
In Asia, Westpac Banking Corp.’s shares declined as much as six per cent after profit and margins slipped. Japan’s economy expanded for a third straight quarter as companies boosted investment and net exports improved.
Elsewhere this week, inflation readings in Japan, UK and Canada are due as well as jobs data in Australia. China’s banks are set to keep their loan prime rates steady after credit expansion picked up far more than expected in January from a year ago, though overall credit growth remains at a historically weak level.
In commodities, oil extended its loss to a fourth day. Oil fell Friday as concerns of ample supply and Trump’s tariffs hurting demand overshadow US threats to Iranian crude exports. Gold was steady. - Bloomberg
