Global markets head into the European session with a restrained tone as investors weigh geopolitical developments alongside signs of cooling momentum in the technology sector.
Asian equities edged higher, tracking modest gains on Wall Street, though concerns over stretched artificial intelligence valuations and their broader economic impact kept sentiment in check. Several regional markets remained closed for Lunar New Year holidays, limiting liquidity.
Japan outperformed, with the Nikkei 225 climbing more than 1%. Investors reacted positively to expectations that Japanese technology firms could benefit from $36 billion in U.S.-backed projects announced under President Donald Trump, with financial backing from Tokyo.
Geopolitics remains a key focus. Talks in Geneva are aimed at easing tensions in the Middle East and Eastern Europe. Iranian Foreign Minister Abbas Araqchi said Iran and the U.S. reached an understanding on “guiding principles” in nuclear discussions, though a final deal remains uncertain. Separately, Ukraine and Russia completed the first round of U.S.-mediated peace talks.
In currency markets, inflation continues to steer central bank policy expectations. The New Zealand dollar fell nearly 0.9% after the Reserve Bank of New Zealand held interest rates steady and signaled that cooling inflation allows it to remain accommodative.
With diplomacy, inflation, and tech valuations in focus, markets are likely to stay cautious as the European trading day unfolds.
By- Shahzad Ahmad
Frequently Asked Questions
Why are markets trading cautiously?
Investors are balancing geopolitical risks with concerns that AI-driven stock valuations may be stretched.
Why did Japan’s Nikkei rise?
The Nikkei 225 gained on optimism that Japanese firms will benefit from major U.S.-funded technology projects.
What is the significance of the Geneva talks?
Diplomatic efforts in Geneva aim to reduce tensions involving Iran, Ukraine, and Russia, which could influence global risk sentiment.
How is inflation affecting currencies?
Inflation expectations shape central bank policy decisions, directly impacting currency movements.
Why did the New Zealand dollar weaken?
The Reserve Bank of New Zealand held rates steady and maintained an accommodative stance, putting pressure on the kiwi.
