(Bloomberg) — Stocks in Asia drifted at the start of the week as traders refrained from making riskier bets after lackluster economic data spurred a selloff in Wall Street. The dollar declined against its peers, notably the euro.
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Benchmarks in Hong Kong and mainland China traded in tight range while a gauge of Asian equities edged lower after hitting a four-month high Friday. US equity index futures advanced, as did contracts on Germany’s benchmark stock index after the conservative party came in first in the country’s federal election.
The prospects for artificial intelligence has fueled a rally in Chinese technology stocks, ofsetting the risks from US tariffs and shifting wagers on Federal Reserve policy easing. Data late last week showed US inflation expectations rising to the highest level in almost three decades, while US business activity expanded at the slowest pace since September 2023.
“We could see more upside for Hong Kong and Chinese markets,” said Vasu Menon, managing director for investment strategy at Oversea-Chinese Banking Corp. Investors are hoping for more Chinese economic stimulus, and “on top of that you’ve got Xi Jinping warming up to corporate leaders.”
Chinese tech shares have staged a bull run this year, driven by optimism over DeepSeek and Xi’s meeting with major business leaders, including Alibaba Group Holding Ltd. co-founder Jack Ma.
Treasury futures slipped on Monday. There was no cash Treasuries trading in Asia, as Japan’s markets were closed for a holiday on Monday.
A gauge of the dollar weakened during early Asian trading. The euro outperformed among Group of 10 currencies, up 0.5% against the dollar after Germany’s conservative leader Friedrich Merz said he’ll move quickly to form a new government following Sunday’s federal election victory.
“Dollar enthusiasm has waned somewhat due to a plethora of factors including gyrations on tariff headlines (and postponed deadlines), modestly negative US economic surprises and declining equity market volatility,” Barclays Plc analysts led by Audrey Ong wrote. “While US equities remain around record highs, there are also growing questions about sustainability of US exceptionalism.”
In Asia, diagnostic kits and vaccine maker shares climbed as researchers in China said they discovered a new coronavirus in bats that enters cells using the same gateway as the virus that causes Covid-19.