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Asia shares upbeat on renewed AI optimism

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Geopolitics loom large, Trump adopts wait-and-see posture

on

Iran

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Dollar gains as traders trim Fed cut expectations

By Rae Wee

SINGAPORE, Jan 16 (Reuters) - Asian stocks advanced on

Friday as the artificial intelligence boom regained momentum,

while the dollar held near a six-week high after upbeat U.S.

economic data left traders trimming bets on rate cuts there.

Oil prices were nursing losses and safe-haven gold and

silver fell after U.S. President Donald Trump adopted a

wait-and-see posture towards the ‌unrest in Iran, having earlier

threatened intervention.

MSCI's broadest index of Asia-Pacific shares outside Japan

was up 0.5% and hovered near a record high hit

in the previous session, as stellar results from ​Taiwanese

chipmaker TSMC breathed new life into the AI trade.

The U.S. and Taiwan also clinched a trade deal on Thursday

that cuts tariffs ‍on many of the semiconductor powerhouse's

exports, directs new investments towards the U.S. technology

industry and risks infuriating ⁠China.

Overnight, gains in technology and ⁠financial stocks sent

Wall Street higher, with Nasdaq futures up 0.22% in the

Asian session. S&P 500 futures similarly tacked on 0.15%.

"We know there's lingering doubts about the spend around

capex ‌and AI more broadly, and I guess with the TSMC report

yesterday being ​pretty solid and sounding optimistic, it

certainly provided a much needed shot in the arm for those AI

names which have been struggling on Wall Street in recent

months," said Tony Sycamore, a market analyst at IG.

"I wouldn't ⁠say it galvanised or basically shot them higher,

but it certainly provided ‍some much needed ​reassurance there,

that everything remains on track."

Japan's Nikkei fell 0.42%, weighed down in part by a

recovery in the yen which has retreated from an 18-month

low.

EUROSTOXX 50 futures fell 0.38% while FTSE futures

eased 0.18%, after European shares scaled a record ‍high

on Thursday.

In currencies, the dollar hovered near a six-week high,

after a slew of upbeat U.S. economic releases including data

that showed the number of Americans filing new applications for

unemployment benefits unexpectedly fell last week.

The euro languished near a 1-1/2-month low and bought

$1.1606, while sterling slipped 0.06% to $1.3376.

Against a basket of currencies, the dollar stood at

99.36, not far from Thursday's top of 99.493, its highest since

December 2.

"Mounting evidence of stable labour conditions is lowering

the odds of an April cut, as fixed income watchers grow

increasingly confident that the next benchmark ​drop will come

from ‍Chair Powell's successor in June," said Jose Torres, senior

economist at Interactive Brokers.

Markets are now pricing in a 67% chance that the Federal

Reserve will stand pat on rates in April, up from 37% a month

ago, according to the ​CME FedWatch tool. Odds for a steady

outcome in June have also risen to 37.5%, compared to 17% last

month.

The yen was 0.1% stronger at 158.48 per dollar,

though it was not too far from an 18-month trough of 159.45 hit

earlier in the week.

The currency has been sold off on the prospect of a snap

election in Japan as early as next month, which investors bet

could pave the way for expanded fiscal stimulus from Prime

Minister Sanae Takaichi.

"For Takaichi, the snap poll offers the chance of a stronger

mandate at home and abroad - but failure would likely spell a

swift end to her premiership," said ​Daniel Hurley, portfolio

specialist at T. Rowe Price.

In the oil market, prices were recovering from their steep

fall in the previous session after Trump's watered-down comments

on Iran allayed concerns over potential military action against

Tehran and oil supply disruptions.

Brent futures were up 0.11% at $63.83 a barrel,

having tumbled more than 4% in the previous session. U.S. crude

was similarly ‍up 0.2% at $59.31 per barrel, after a 4.6%

fall on Thursday.

Spot gold was down 0.16% at $4,607.50 an ounce.