Asian Markets Gain Ground Amid AI Concerns and Oil Price Fluctuations

Market Overview and Key Developments

By Scott Murdoch

Stock Market Performance

SYDNEY, Feb 18 (Reuters) - Asian stocks pushed higher on Wednesday despite the renewed artificial intelligence worries gripping international markets, while oil prices fluctuated after Iran touted progress in nuclear negotiations with the United States.

Currency Movements

The New Zealand dollar sank after the central bank said monetary policy needs to remain accommodative for some time to support the economic recovery.

Commodity Prices

Japan's benchmark Nikkei 225 index rose 1.4%, as it snapped a three-day selloff, while Australia's S&P/ASX200 was up 0.5%.

Geopolitical Factors

Mainland China, Hong Kong, Singapore, Taiwan and South Korea were among markets closed for Lunar New Year holidays.

Stock futures pointed to slight gains at the open in Europe. Euro Stoxx 50 futures were up 0.07%, German DAX futures added 0.06% and FTSE futures were up 0.14% at 10,529.

U.S. stock futures were also positive with the S&P 500 e-minis, up 0.06% at 6,864.8.

The positive mood in Asia followed a lacklustre session on Tuesday on Wall Street as investors grappled with the outlook for the AI boom.

Concerns that companies are over-investing, along with angst about the extent to which the nascent technology could disrupt labor markets, have fuelled investor jitters in recent weeks.

The yield on benchmark U.S. 10-year notes was up 1.7 basis points at 4.0712% on Wednesday. The 30-year bond yield was up 1.6 basis points to 4.7011%.

"AI uncertainty remains a source of volatility, both in terms of the difficulty in assessing which AI companies will be the winners and losers but also what sort of impact will AI have in other companies and sectors of the economy," NAB analysts said.

Brent and West Texas Intermediate crude oil futures were up between 0.2% and 0.3% on Wednesday at $67.60 and $62.51 per barrel, respectively, after both slid to close at more than two-week lows in the previous session.

Following talks in Geneva on Tuesday, Iran's foreign minister said Tehran and Washington reached an understanding on main "guiding principles" towards resolving their longstanding nuclear dispute, easing worries about a military conflict near the Strait of Hormuz that could disrupt global oil supplies.

Gold bounced higher after opening in negative territory. It was up 1% to around $4,926 per ounce and silver gained 2.15% to around $74.94 per ounce.

The U.S. dollar index, which measures the greenback against a basket of major peers, was up slightly in Asia hours at 97.22. 

The traditional safe-haven currency held its ground as geopolitical risks kept markets on edge and investors awaited minutes from the Federal Reserve's January meeting, due later on Wednesday, for signals on the path for interest rates.

The euro edged down 0.1% to $1.1843, while sterling stabilised at $1.3555 following a 0.5% slide in the previous session.

The New Zealand dollar fell 0.8% to $0.5998 after the Reserve Bank of New Zealand kept interest rates on hold at 2.25% at its first meeting of the year and flagged policy would likely stay accommodative for some time.

The Aussie eased 0.2% to $0.7069, while the yen firmed almost 0.2% to 153.58 per dollar.

Japan's annual bond issuance will likely surge 28% three years from now due to rising debt-financing costs, Reuters reported on Tuesday, citing a finance ministry estimate.

Japan would need to issue up to 38 trillion yen ($248.3 billion) worth of bonds in the fiscal year starting in April 2029 to fill a hole from expenditures surpassing tax revenues, up from 29.6 trillion yen in fiscal 2026, the report said.   

(Reporting by Scott Murdoch; Editing by Kevin Buckland and Lincoln Feast.)