A look at the day ahead in Asian markets.

Wall Street steadied after Monday's freak out over AI-linked mega cap valuations, with Nvidia recouping some of its historic market cap loss while, upon a day's reflection, China's budget startup DeepSeek looked less threatening to U.S. tech leadership.

Nvidia gained almost 8% after a 17% slump wiped almost $600 billion off its value on Monday, a record for any company. The tech-centric Nasdaq was up 2% and the S&P 500 about one percent. Monday's slide in companies exposed to artificial intelligence collectively reduced the size of the market by more than $1 trillion.

Twenty-four hours later, it looks more like an overdue reset from a record run dominated by the largest companies. The S&P 500 equal weight index fell slightly on Tuesday after actually closing up a smidge during the tech-led meltdown on Monday.

Nvidia short sellers raked in over $6 billion in profits on Monday, data analytics firm Ortex said. Short bets also paid off big time on chip-maker Broadcom, and other AI-linked stocks.

Options traders were quick to pile back into Nvidia contracts after Monday's slide. Call options, typically bought to express a bullish view on a stock, outnumbered put options 1.6-to-1, nearly in line with the 1-year average, after dipping to a more than two-month low of 1.36-to-1 on Monday.

More than half of the Magnificent 7 companies are reporting earnings this week, with Meta, Tesla and Microsoft releasing Wednesday after the bell and Apple post-close on Thursday. This will provide a glimpse of how their AI investments are faring so far and a chance for executives to comment on how much DeepSeek has changed the competitive landscape.

While there is scepticism over DeepSeek's cost claims, it clearly introduces competition to the AI game from China.

Hedge fund manager Bridgewater Associates said Tuesday DeepSeek's launch of its latest artificial intelligence (AI) models could lead to a short-term correction in many tech companies' share prices but is positive for the industry as an incentive to invest more in efficiency gains.

Japan's Nikkei 225 share average could take its cue from the U.S. bounce, as it did with a 1.4% slide overnight. Otherwise many Asian centers are closed on Wednesday for the Chinese New Year.

The Federal Reserve opened its two-day meeting on Tuesday and is expected to keep rates steady after 100 basis points of easing from September to December.

U.S. rate futures are pricing in almost 50 basis points of cuts this year, or two 25 bp reductions starting in June. Until this week, it had factored in just one cut.

The European Central Bank meets on Thursday and is expected to lower rates, which would widen the dollar's interest rate advantage.

The dollar turned higher against the euro and yen, buoyed by U.S. President Donald Trump's promise to impose tariffs on imported computer chips, pharmaceuticals and steel in an effort to persuade the producers to make them in the United States.

Dollar/yen rose 0.7% to 155.63, snapping three straight down sessions magnified by Monday's drop in Treasury yields as investors sought the safety of U.S. government debt. Yields firmed on Tuesday.

Here are key developments that could provide more direction to markets on Wednesday:

- Australia CPI (Dec & Q4)

- Japan Consumer Confidence (Jan)

- Federal Reserve rate decision

- Meta, Tesla, Microsoft report earnings