Asian Stocks Gain as DeepSeek Fuels China AI Rally: Markets Wrap

(Bloomberg) — Asian shares rose partly on optimism about artificial intelligence in China, defying broader market caution after a last-minute deal reversed Donald Trump’s decision to impose tariffs on Colombia.

Shares advanced in Japan, Hong Kong and mainland China, with Chinese tech firms linked to DeepSeek’s business model rallying after the AI startup gained traction. In contrast, US futures slid amid concerns that the Chinese app may disrupt US technological leadership. 

The dollar rose along with Treasuries, even after the White House said Trump will hold off on imposing threatened tariffs and sanctions on Colombia following a bilateral agreement on the return of deported migrants.

“DeepSeek shows that it is possible to develop powerful AI models that cost less,” said Vey-Sern Ling, managing director at Union Bancaire Privee. “It can potentially derail the investment case for the entire AI supply chain, which is driven by high spending from a small handful of hyperscalers.”

Despite the enthusiasm about China’s AI breakthrough, broader investor mood in other asset classes has soured as Trump’s latest success in pressuring Colombia to accept his demands may reinforce concerns that he will weaponize tariffs to achieve other policy agendas. It also threatens to derail last week’s global market rebound after he avoided placing immediate levies on goods from Mexico, Canada and China, which initially assuaged fears of an imminent global trade war.

Elsewhere, China’s factory activity unexpectedly slowed ahead of China’s Lunar New Year holiday and the services sector cooled, signs stronger fiscal stimulus is needed even after a recent stimulus push.

Markets in Taiwan, South Korea, and Australia are closed for a holiday Monday. 

In commodities, oil fluctuated as investors reacted to rapid-fire moves on trade by the Trump administration. Gold slipped but remained not far from a record high.

Later this week, the US central bank is widely expected to hold interest rates steady at the end of its two-day meeting on Wednesday, marking the first pause in the rate-cutting cycle it kicked off in September. 

The US economy remains strong with robust employment growth and the decline in inflation has slowed, “there is therefore no need to cut interest rates urgently,” ANZ Group Holdings Ltd. economists including Sharon Zollner wrote in a note to clients. “In addition, yet-to-be-confirmed US trade and tariff policy, federal government efficiency drives, re-focused energy policy and deregulation all hold implications for growth and inflation. This justifies FOMC caution.” 

Key events this week: 

• ECB President Christine Lagarde and others speak, Monday
• US consumer confidence, durable goods, Tuesday
• Chile rate decision, Tuesday
• Australia CPI, Wednesday
• BOE Governor Andrew Bailey speaks, Wednesday
• US rate decision, Wednesday
• Tesla, Microsoft, Meta, ASML earnings, Wednesday
• Canada rate decision, Wednesday
• Brazil rate decision, Wednesday
• BOJ Deputy Governor Ryozo Himino speaks, Thursday
• Eurozone consumer confidence, unemployment, GDP, Thursday
• ECB rate decision, Thursday
• South Africa rate decision, Thursday
• US GDP, jobless claims, Thursday
• Apple, Deutsche Bank, Shell earnings, Thursday
• Japan unemployment, Tokyo CPI, Friday
• US personal income & spending, PCE inflation, Friday
• Colombia unemployment, rate decision, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.9% as of 12:56 p.m. Tokyo time
• Nikkei 225 futures (OSE) fell 0.4%
• S&P/ASX 200 futures fell 0.1%
• Japan’s Topix rose 0.8%
• Hong Kong’s Hang Seng rose 0.9%
• The Shanghai Composite rose 0.3%
• Euro Stoxx 50 futures fell 0.5%

Currencies

• The Bloomberg Dollar Spot Index rose 0.2%
• The euro fell 0.3% to $1.0469
• The Japanese yen rose 0.1% to 155.82 per dollar
• The offshore yuan fell 0.3% to 7.2660 per dollar

Cryptocurrencies

• Bitcoin fell 3.1% to $101,333.9
• Ether fell 3.5% to $3,181.3

Bonds

• The yield on 10-year Treasuries declined three basis points to 4.59%

Commodities

• West Texas Intermediate crude fell 0.7% to $74.16 a barrel
• Spot gold fell 0.3% to $2,761.53 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Abhishek Vishnoi, Jake Lloyd-Smith and Winnie Hsu.

©2025 Bloomberg L.P.