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 ( AVGO ), 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 ( MSFT ) releasing Wednesday after the bell and Apple ( AAPL )

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 ( MSFT ) report earnings