Monitoring dollar, DeepSeek and China’s PMIs | Finance news

By Jamie McGeever

(Reuters) – A take a look at the day forward in Asian markets.

A giant week for world markets kicks off in Asia on Monday with traders nonetheless navigating the blizzard of headlines round U.S. President Donald Trump’s possible financial agenda, whereas attempting to gauge whether or not the “U.S. exceptionalism” narrative could also be dropping its luster.

The greenback fell 1.8% final week, its worst week since November 2023. If the buck is consolidating, it should not actually be a shock – it hit a two-year high earlier this month and hedge fund internet ‘long’ place was the most important in 9 years.

The greenback and U.S. shares have been carefully correlated, lifted by the massive wave of world capital inflows as traders wager closely on the American AI, tech, growth and returns increase.

But when the greenback’s slide is a signal that the “U.S. exceptionalism” flame is beginning to flicker, is Wall Road primed for a cooling off period too?

The S&P 500 hit a new high final week and the Nasdaq got here close. Index ranges are traditionally high, valuations are stretched, and large occasion risk looms this week within the form of the Fed’s coverage assembly and ‘Massive Tech’ earnings.

Scrutiny on U.S. tech is intensifying as ripples from a Chinese language AI startup known as DeepSeek unfold. DeepSeek just lately launched a free, open-source AI model it claims is at the least the equal of more established fashions like ChatGPT on many ranges, however constructed at a fraction of the price.

It is early days but when this shines a vital mild on the massive sums being spent on AI by U.S. tech corporations, Wall Road may wobble.

The Asian calendar on Monday is dominated by China’s ‘official’ manufacturing and repair sector buying managers index reviews for January.

A Reuters ballot suggests the manufacturing PMI will likely be unchanged from the earlier month at 50.1. On the one hand, that might signify the fourth straight month of growth within the sector. It could additionally point out nearly no growth in any respect for the second month in a row.

Information on Friday confirmed Chinese language state-owned corporations’ income final 12 months just about evaporated, rising solely 0.4% on the earlier 12 months. Wider industrial sector income figures are due this week, maybe as early as Monday, and are anticipated to verify that 2024 was the worst 12 months in a long time.

Traders will give their second day verdict on Friday’s Financial institution of Japan’s price hike. The initial take appeared to be that it was a ‘hawkish hike’, however Japanese money markets are nonetheless pricing in solely one other 25 foundation factors of tightening this 12 months, unchanged from pre-Friday ranges. This implies BOJ steering was really fairly impartial, and Japanese stock futures are pointing to a sturdy rise on Monday.

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