SYDNEY- Asia share markets crept higher on Monday as Hong Kong’s tech sector stole the limelight, while upbeat Japanese economic growth contrasted with a weak US retail sales report to lift the yen on the dollar.
Geopolitics remained in focus with reports that talks on the Russian-Ukraine conflict will begin in Saudi Arabia this week, though the participants are not entirely clear.
The imminent threat of reciprocal US tariffs has receded until April, but the risk that they might include levies based on value added taxes in other countries was a major worry.
“The prospect, however misguided, of the US levying an additional 20 percent tariff on all EU imports, on top of whatever else it deems appropriate, and to varying degrees on all other countries who have VAT regimes is a truly terrifying prospect in terms of the implications for global growth,” said Ray Attrill, head of FX research at National Australia Bank.
The Financial Times reported on Sunday that the European Commission would explore tough import limits on certain foods made to different standards in an effort to protect its farmers, echoing President Donald Trump’s reciprocal trade policy.
For now, investors were just relieved that major tariffs had not already been introduced and MSCI’s broadest index of Asia-Pacific shares outside Japan firmed 0.3 percent.
Tokyo’s Nikkei edged up 0.2 percent after Japan reported surprisingly strong economic growth of an annualized 2.8 percent for the fourth quarter. The gains were limited by a further rise in the yen to 151.65 per dollar.
South Korean shares added 0.6 percent and Taiwan’s rallied 1.3 percent.
Chinese blue chips were flat, with recent moves led by the Hong Kong market which jumped 7 percent last week on optimism the Chinese firms could deliver low cost versions of AI to compete with the West.
The rush was underpinned by a 24 percent surge in Alibaba on news it would partner with Apple to support iPhones’ artificial intelligence services offering in China.
Alibaba reports earnings on Thursday and options imply the share could move 7.5 percent in either direction on the results.
Goldman Sachs has raised its outlook for Chinese growth and stocks, arguing that widespread adoption of AI could raise earnings per share by 2.5 percent a year over the next decade. It would also lift the fair value of Chinese equity by 15 percent to 20 percent and attract $200 billion of fund inflows.
The pan-European STOXX 600 index has also been attracting global funds having climbed for eight straight weeks to be up 8 percent since the turn of the year.
