ASIA STOCKS: Asian Equities Mixed In Early Trading, Nvidia & Tariffs Key Drivers

• Asian stocks fell sharply as a global tech selloff, triggered by Chinese AI startup DeepSeek’s rise, rattled investor confidence. Japan’s Topix and Nikkei indices dropped 0.6% and 1.5%, respectively, with chip-related stocks like Advantest and Disco Corp. sliding further. Concerns emerged over the sustainability of high AI valuations after DeepSeek's low-cost model topped Apple’s app store, while Nvidia saw a historic $589 billion market-cap loss.
• The yen strengthened, adding pressure on Japanese exporters, but strategists suggested the market could stabilize ahead of earnings season.
• Australia's ASX is trading little changed this morning, benefitting from its small exposure to tech stocks. Consumer Discretionary stocks are leading the gains, while Real Estate stocks, led by Goodman Group after concerns grow due to their large exposure to data centers, the stock was last 7% lower.
• US equity futures were flat after President Trump announced upcoming tariffs on foreign semiconductors and metals, fueling USD gains. Global attention is now focused on this week’s Big Tech earnings from Microsoft, Apple, and others, with slower profit growth expected amid stretched valuations. Lunar New Year holidays in many Asian markets limited trading activity.

Today's result has continued the trend of firm pricing for ACGB auctions, as the weighted average yield printed 0.28bps through prevailing mids (per Yieldbroker). The cover ratio was 3.6500x versus 2.8233x previously.

• An outright yield which was around 35bps higher than the previous auction appears to have contributed to today’s bidding even though it was still 35bps lower than the November 2023 high.
• It is also important to acknowledge that improved sentiment towards longer-dated global bonds over the past month might have assisted the bid.
• The ACGB Jun-54 cash trade is slightly cheaper in post-auction dealings.