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Yen rallies as geopolitical risks drive haven bids
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Tech stocks pressured by high valuations
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China to scrap FX reserves for some contracts
By Rocky Swift
TOKYO, Feb 27 (Reuters) - Dour sentiment persisted in
the Asian trading day on Friday as concerns about technology
company valuations weighed on shares and Middle East tensions
kept energy markets on edge.
Japanese shares followed Wall Street lower after what
appeared to be glowing results from AI sector bellwether Nvidia
failed to impress investors. The yen and U.S. Treasuries rose,
while gold held steady after a two-day advance.
An Omani mediator of U.S. and Iran nuclear talks gave an
optimistic readout over the latest round of negotiations, but
uncertainty still hung over energy markets with no sign of a
breakthrough that would avert potential U.S. strikes.
"AI and geopolitics remained front and centre for financial
markets, prompting a retreat from risk assets and a shift
towards safe havens," Mantas Vanagas, senior economist at
Westpac Group, wrote in a note.
"With no major breakthroughs announced in the U.S.-Iran
talks, crude markets remained in wait-and-see mode, continuing
to price in a significant risk of military escalation between
the two countries," he said.
MSCI's broadest index of Asia-Pacific shares outside Japan
was down 0.4%, while Japan's Nikkei stock index
slid 0.8%.
Nvidia posted better-than-expected results for the January
quarter on Wednesday and forecast current-quarter revenue above
market estimates. But U.S. shares ended lower and the company's
stock was flat in after-hours trading.
U.S. equity futures slid in Asian trading, with the S&P 500
E-minis down 0.41% and the tech-heavy Nasdaq 100 E-minis
dropping 0.36%.
"It seems 'the Street' simply wanted more, or perhaps just
isn't prepared to chase the stock at its current lofty
valuation," IG market analyst Tony Sycamore said about Nvidia's
results in a note.
The dollar index, which measures the greenback
against a basket of currencies, rose 0.04% to 97.77, with the
euro little changed at $1.1797.
The yen strengthened 0.2% to 155.86 per dollar.
Sterling was steady at $1.3482.
The U.S. and Iran plan to resume negotiations over Tehran's
nuclear program after consultations in their countries'
capitals, Omani Foreign Minister Sayyid Badr Albusaidi said in a
post on X after the day's meetings in Switzerland.
Any substantial move forward could curb chances for U.S.
President Donald Trump to carry out a threatened attack on Iran
that many fear could escalate into a wider war.
The yield on benchmark U.S. 10-year notes fell
1.5 basis points to 4.002%. The 30-year bond yield
fell 1.3 basis points to 4.6565%.
Data in Japan showed cooling inflation in Tokyo and
weaker-than-expected factory output, complicating the case for
policy rate increases by the central bank. The data came on the
heels of Prime Minister Sanae Takaichi putting forward two Bank
of Japan board nominees who share her fiscally dovish mindset.
China's central bank said on Friday it will scrap the
foreign exchange risk reserves for some forward contracts, a
move that would reduce the cost of dollar buying.
The yuan notched its biggest annual gain against the dollar
since 2020 last year, strengthening past the psychologically
important 7-per-dollar level, and the upward momentum has
continued into the new year.
In Britain, a by-election will be closely watched, as a
defeat for the Labour Party could add to pressure on British
Prime Minister Keir Starmer following criticism over several
recent policy reversals.
Polls say the vote in Gorton and Denton, in northwestern
England's Greater Manchester, is too close to call between
Labour, populist Reform UK and the left-leaning Greens.
Spot gold fell 0.23% to $5,175.03 an ounce, while
U.S. crude rose 0.09% to $65.27 a barrel.
In cryptocurrencies, bitcoin fell 0.3% to $67,290.45
and ether declined 0.68% to $2,016.78.