(Sharecast News) - Asian equities advanced on Wednesday despite renewed concerns over the sustainability of the global artificial intelligence boom, while oil prices remained under pressure after Iran signalled progress in nuclear talks with the United States.
Trading volumes were thinner than usual, with mainland China, Hong Kong, Singapore, Taiwan and South Korea closed for Lunar New Year holidays.
The firmer tone in the region followed a lacklustre session on Wall Street, where investors continued to question whether companies are over-investing in AI and the potential for the technology to disrupt labour markets.
"US stock futures edged higher alongside gains in Asian markets, suggesting a cooling off after recent declines fuelled by concerns over artificial intelligence," said Patrick Munnelly, market strategy partner at TickMill.
He added that "after months of AI-driven stock market rallies, volatility has increased as investors weigh the risks of disruption against doubts about whether massive investments in AI will deliver quick returns," a debate he noted was particularly significant in Asia given its role as a hub for semiconductor design and electronics manufacturing.
Markets in the green as RBNZ holds rates
In Japan, the Nikkei 225 rose 1.02% to 57,143.84 and the broader Topix gained 1.21% to 3,807.25.
GS Yuasa jumped 9.02%, TDK Corporation climbed 6.73% and Panasonic Holdings added 5.38%.
Fresh data showed Japan recorded a trade deficit of JPY 1.15trn in January, narrower than expectations for a JPY 2.14trn yen shortfall.
Exports surged 16.8% year on year, well above forecasts for a 12% increase, with strong demand from China and other parts of Asia, including Thailand, India and South Korea, offsetting a 5% drop in shipments to the United States amid higher tariffs.
Imports fell 2.5%, missing expectations for a 3% rise, as softer domestic demand curbed purchases, though Japan still logged outsized imports from China, the US and Europe.
In Australia, the S&P/ASX 200 gained 0.54% to 9,007.00.
Netwealth Group surged 13.58%, Magellan Financial Group rose 12.18% and Challenger advanced 8.27%.
New Zealand's S&P/NZX 50 climbed 1.65% to 13,247.02, led by Pacific Edge up 4.76%, EBOS Group rising 4.04% and Tourism Holdings gaining 3.54%.
The Reserve Bank of New Zealand left the Official Cash Rate unchanged at 2.25%, its lowest level in three-and-a-half years, and said policy "is likely to remain accommodative for some time" to support a recovery it described as nascent.
The central bank signalled it would "gradually normalise" settings as inflation fell sustainably towards the 2% midpoint of its 1% to 3% target range, projecting inflation would slow to 2.3% by the end of 2026 and reach target in the second quarter of 2027.
It saw the average OCR at 2.38% by year-end, compared with 2.28% in November, implying a 50% chance of a hike, and at 2.62% by mid-2027.
Governor Anna Breman said policymakers were "not planning on hiking the OCR until we see more inflationary pressures and a stronger economy".
The kiwi slid against the dollar, with the greenback last up 0.62% to trade at NZD 1.6636, and two-year yields fell sharply as markets pared expectations for tightening.
Traders now priced roughly a two-thirds chance of a hike by October, down from 90% previously, while still fully pricing a move in December.
Munnelly noted that "the US dollar strengthened against other major currencies, with the New Zealand dollar experiencing the sharpest drop".
"This drop came after the country's central bank decided to hold interest rates steady, prompting investors to lower their expectations for further hikes."
Dollar gains on other regional currencies
Elsewhere in currency markets, the dollar was last up 0.27% on the yen at JPY 153.73, and gained 0.11% against the Aussie to change hands at AUD 1.4127.
Oil prices edged higher despite easing geopolitical tensions after Iran's foreign minister said talks in Geneva had reached an understanding on guiding principles towards resolving the long-running nuclear dispute, reducing fears of disruption near the Strait of Hormuz.
Brent crude futures were last up 0.3% on ICE at $67.62 a barrel and the NYMEX quote for West Texas Intermediate rose 0.34% to $62.54.
Reporting by Josh White for Sharecast.com.
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