Asian shares rose on Friday, reversing Wall Street's negative lead as the U.S. exceptionalism narrative continued to lose its shine, while once unloved Chinese stocks found themselves more buyers thanks to optimism over artificial intelligence (AI).
Gold hovered near a record high and was set to extend its gains for an eighth consecutive week, helped by safe-haven flows due to concerns over Donald Trump's tariff threats and amid contentious talks as the U.S. President pushes for a quick deal to end the Russia-Ukraine war.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.8% in the early Asian session, boosted by a jump in Hong Kong-listed stocks.
Hong Kong's Hang Seng Index advanced 1.8% shortly after the open, while tech shares surged 2.5%.
Similarly, China's CSI300 blue-chip index gained 0.2%, with the CSI big data index rising 2%.
Chinese stocks have been on a tear in recent days, driven by DeepSeek's AI breakthrough that reignited investor interest in China's technology capabilities.
While the Hang Seng Tech Index has gained 26% for the year thus far, the S&P 500 is up just 4% over the same period.
"DeepSeek has been a catalyst for sentiment changing," said Brian Arcese, portfolio manager at Foord Asset Management.
Earlier this week, Chinese President Xi Jinping held a rare meeting with some of the biggest names in China's technology sector, urging them to "show their talent" and be confident in the power of China's model and market.
"I think that is a shift in China. These things are done for a reason, nothing's really coming out of the meeting other than the fact that we're showing that we've met... but that is a big signal, you don't do that lightly," said Arcese.
Elsewhere, Nasdaq futures ticked 0.02% higher while S&P 500 futures fell 0.03%, both struggling to recoup Wall Street's losses from the previous session.
Thursday's downbeat forecast from Walmart (WMT.N), opens new tab, the world's largest retailer, dampened investor sentiment and stoked concerns about the outlook for the world's largest economy.
"The Walmart report, it's such a bellwether for the U.S. economy, and usually probably in isolation you could look through it ... but following the weak retail sales data, suddenly there's some concerns out there," said Tony Sycamore, a market analyst at IG.
EUROSTOXX 50 futures were down 0.05%, while FTSE futures lost 0.08%.
Japan's Nikkei (.N225), opens new tab edged up 0.05%, with its gains capped by a stronger yen.
DOLLAR EASES
While the threat of further import duties from Trump continued to cast a pall over markets, traders are also sobering up to the fact that the start of his second term has been mostly bluster on the tariff front.
The dollar was headed for a third straight weekly loss, as bulls who had built up big long positions in anticipation of a trade war have backed off while Trump equivocates about tariffs.
Several Federal Reserve officials on Thursday said they are taking note of what they see as rising inflation risks and the uncertain impact of Trump's trade, immigration and other policies.
The weaker dollar left sterling at a two-month high of $1.2674, while the euro steadied at $1.0490 ahead of a weekend election in Germany.
The yen , meanwhile, fell more than 0.4% to 150.28 per dollar, after having jumped on Thursday on heightened bets of further Bank of Japan (BOJ) rate hikes this year.
Data on Friday showed Japan's core consumer inflation hit 3.2% in January, its fastest pace in 19 months.
"The data supports the growing market conviction of a BOJ rate hike by July, and a possible third hike by year-end," said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.
U.S. Treasury yields steadied on Friday, after falling in the previous session following comments from Treasury Secretary Scott Bessent who said any move to increase the share of longer-term Treasuries in government debt issuance is some way off.
The two-year yield was last little changed at 4.2635%, while the benchmark 10-year yield stood at 4.4975%.
In commodities, oil prices dipped but were headed for a weekly gain.
Brent crude oil futures eased 0.1% to $76.40 a barrel, but were set to rise more than 2% for the week. U.S. West Texas Intermediate crude eased 0.07% to $72.43, but was also on track for a weekly gain of over 2%.
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