Japanese and South Korean equity indexes traded in a tight range, while those in Australia declined. Futures pointed to gain in Hong Kong and an advance in US benchmarks after a holiday on Monday.
Investors in Asia will also focus on how China’s tech-powered rally fares after DeepSeek’s breakthrough in artificial intelligence drove a rally of more than $1 trillion in the country’s shares. The optimism around a revival in China’s economy was boosted Monday after a meeting between President Xi Jinping and business figures, including Alibaba Group Holding Ltd. co-founder Jack Ma, spurred optimism that a years-long crackdown on the private sector is ending.
“We see some positive implications from the highly discussed meeting between President Xi and leading industry executives,” Citigroup analyst Alicia Yap wrote in a note. “The decision to call for such a meeting likely indicates the importance of technology innovation and the contribution of private enterprises to the development and growth of China’s economy.”
Xi’s meeting drew many of the biggest names in Chinese business over the past decade, representing industries from chipmaking and electric vehicles to AI. The summit demonstrated Beijing’s softer stance toward the companies that fuel most of economy, just as Washington ramps up a potentially debilitating campaign of global tariffs.
Elsewhere, the US asked European nations to spell out what security guarantees and equipment they can offer Ukraine to ensure a lasting peace settlement. European officials say they are working on a major package to ramp up defense spending and some EU leaders are meeting in Paris to draw up their response. “The goalposts are shifting, and the EU is realizing they can rely less and less on the US for protecting their borders,” said Aneeka Gupta, head of macro research at WisdomTree UK Ltd. “In lockstep, we’re going to have to see European countries spend more on defense. That does warrant a bit more caution on bonds.”The developments have cemented the view that debt sales will need to increase as European nations shoulder the cost of a lasting peace deal between Ukraine and Russia. Upgrading defense and protecting Ukraine may cost Europe’s major powers an additional $3.1 trillion over 10 years, according to Bloomberg Economics estimates.
The Australian dollar held near a two-month high before a central bank meeting that’s expected to see the first rate cut in four years. However, a strong labor market, resilient consumer spending, robust credit growth and a weaker currency could make the case for a hold, said Bloomberg Economics economist James McIntyre.
Meanwhile, BHP Group Ltd.’smxap first-half profit slumped 23% in results released early Tuesday, as the world’s biggest public miner said it was impacted by falling Chinese demand for key commodities including iron ore and copper.
Federal Reserve Governor Christopher Waller said recent economic data support keeping US interest rates on hold, but if inflation behaves as it did in 2024, policymakers can get back to cutting “at some point this year.”
