(Sharecast News) - Asia-Pacific markets rebounded on Thursday after US president Donald Trump softened his stance on tariffs and geopolitical pressure linked to Greenland, easing concerns over a further escalation in trade tensions.
As Patrick Munnelly, market strategy partner at TickMill, noted, "global stock markets appeared poised to extend their recent rally after president Donald Trump softened his stance on imposing tariffs on Europe, alleviating worries about a potential escalation in transatlantic trade disputes."
Speaking at the World Economic Forum in Davos, Trump said he had "formed the framework of a future deal with respect to Greenland" alongside NATO secretary general Mark Rutte, a shift in tone that helped lift risk sentiment across the region.
Munnelly added that "Asian markets followed Wall Street's lead, buoyed by Trump's remarks," with US stock futures also pointing to further gains.
Tokyo leads regional gains amid mixed trade data
Japanese equities led regional advances, underpinned by a strong rally in technology stocks.
The Nikkei 225 rose 1.73% to 53,688.89 and the Topix gained 0.74% to 3,616.38, with SoftBank Group surging 11.61%, Toto climbing 9.72% and Dainippon Screen Manufacturing up 9.62%.
Munnelly said "technology stocks spearheaded the rally, with semiconductor companies enjoying a significant boost," noting that optimism around artificial intelligence helped drive gains.
During the Davos forum, Nvidia chief executive Jensen Huang struck an upbeat tone on AI, which "stoked investor enthusiasm," according to Munnelly.
Macro data was mixed, however, with Japan's exports rising 5.1% year on year in December, below forecasts for 6.1%, as shipments to the US fell 11.1% following a November rise.
Imports increased 5.1%, beating expectations, while full-year exports for 2025 rose 3.1%, slowing sharply from 2024.
Chinese markets posted modest gains as sentiment improved alongside broader regional risk appetite.
The Shanghai Composite edged up 0.14% to 4,122.58 and the Shenzhen Component rose 0.5% to 14,327.04, with BBMG Corporation, China First Heavy Industries and Geo-Jade Petroleum all rising more than 10%.
In Hong Kong, the Hang Seng Index added 0.17% to 26,629.96, led by gains in Pop Mart International Group, Wharf Real Estate Investment and Li Auto.
Munnelly observed that the improved market mood had reduced demand for defensive assets, saying, "the improved sentiment took a toll on safe-haven assets," with gold dipping and investors rotating back toward equities.
Seoul in the green despite weaker economic growth
South Korean shares also strengthened, with the Kospi 100 climbing 0.99% to 5,535.94 despite weak economic data.
Samsung SDI surged 18.67%, while Doosan and Posco Future M posted strong gains.
Munnelly highlighted that South Korea's equity market, "often regarded as a barometer for global tech demand," benefited from the global technology rally.
The gains came even as fourth-quarter GDP growth of 1.5% missed expectations and quarterly output contracted 0.3%, marking the sharpest slowdown since late 2022.
Inflation eased to 2.1% last year, while the Bank of Korea recently held interest rates at 2.5% amid continued weakness in the won.
Sydney rises on solid labour market data
Australian equities advanced as improving labour market data reinforced expectations of tighter monetary policy.
The S&P/ASX 200 rose 0.75% to 8,848.70, with Premier Investments, DroneShield and Mesoblast leading gains.
Munnelly noted that "three-year bond yields climbed to their highest level since late 2023, driven by an unexpected drop in unemployment for December," adding that this had "sparked speculation that the Reserve Bank of Australia might raise interest rates as early as next month."
The Australian dollar strengthened to its highest level in more than a year.
In New Zealand, the S&P/NZX 50 climbed 1.04% to 13,556.87, supported by gains in A2 Milk Company, Fletcher Building and Meridian Energy.
Dollar mixed as oil prices retreat
In currency markets, the dollar edged 0.19% higher against the yen to trade at JPY 158.60, but weakened against risk-sensitive currencies, falling 0.6% on the Aussie to AUD 1.47 and 0.53% against the Kiwi to change hands at NZD 1.7022.
Oil prices retreated as risk appetite improved elsewhere, with Brent crude futures last down 1.67% on ICE at $64.15 per barrel, and the NYMEX quote for West Texas Intermediate falling 1.73% to $59.57.
Reporting by Josh White for Sharecast.com.
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