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Asia shares rise, helped by China optimism

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Gold perched near record high

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Trump tariffs, growth worries weigh

By Rae Wee

SINGAPORE, Feb 21 (Reuters) - 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 ), the

world's largest retailer, dampened investor sentiment and stoked

concerns about the outlook for the world's largest economy.

"The Walmart ( WMT ) 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 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%.