Technology stocks led gains in Asia-Pacific markets on Wednesday, tracking advances on Wall Street as investor angst ebbed over the emergence of a low-cost Chinese AI model that some see rivalling U.S. dominance of the industry.
The dollar remained relatively firm as traders rotated back into the currency from safe-haven peers such as the Japanese yen, while also getting a boost from fresh tariff warnings from the Donald Trump administration.
Trading was thinned in Asia by Lunar New Year holidays that shuttered exchanges in mainland China and Hong Kong, as well as Taiwan, Singapore and South Korea.
Japan's Nikkei share average advanced 1% on the day, snapping three straight days of declines.
Australia's stock benchmark added 0.6%, with a subindex of tech names climbing 1.8%.
Futures for the U.S. S&P 500 rose 0.2%, following a 0.9% rise for the cash index overnight. Nasdaq futures pointed 0.4% higher following a 2% rally.
The tech-heavy Nasdaq had tumbled more than 3% in the previous session, after the spiking popularity of Chinese startup DeepSeek's app called into question sky-high valuations for U.S. chipmaker Nvidia and others at the forefront of the AI revolution.
"There appeared to be a level of relief in the rally, mostly because of a forming consensus that while ostensibly impressive, DeepSeek will either lack the scalability to truly disrupt the AI space and, if anything, the company's low-cost model will actually increase demand for GPUs," said Kyle Rodda, senior financial market analyst at Capital.com.
Attention now turns to mega-cap tech company earnings coming up on Wall Street later in the day from Facebook owner Meta Platforms, Microsoft and Tesla.
The Federal Reserve also announces a policy decision, although it is widely expected to keep interest rates unchanged.
The dollar index, which measures the currency against six major rivals, was flat at 107.91 following two days of consecutive 0.2% advances. It ended last week with a 0.6% tumble, as traders judged President's Trump's tariffs would be milder than expected following threats of huge levies during the election.
On Tuesday, though, the White House reaffirmed plans to hit Canada and Mexico with tariffs on Saturday - which Trump previously said would be 25% - and said the president was also still weighing fresh tariffs on China.
The Mexican peso edged up slightly to 20.5169 per dollar, while Canada's loonie was a touch stronger at C$1.4394 versus the greenback.
The yuan added 0.2% in offshore trading to stand at 7.2597 per dollar.
The euro ticked up to $1.0442. Sterling rose 0.2% to $1.2462.
The yen strengthened 0.2% to 155.24 per dollar, garnering some support from minutes of the Bank of Japan's December policy meeting, which signalled the intent of the board to continue with monetary tightening.
The Australian dollar dipped after a softer-than-expected reading on consumer inflation opened the door to an interest rate cut next month. The Aussie sank 0.4% to $0.6229.
Oil prices eased slightly, with Brent crude oil futures declining 0.2% to $77.35 per barrel after settling up 0.5% overnight. U.S. West Texas Intermediate crude futures edged down about 0.1% to $73.70, following Tuesday's 0.8% rise.
