Asian shares wobble, yen and Treasuries rise on AI, geopolitical woes

By Rocky Swift

TOKYO, Feb 27 (Reuters) - Asian shares wobbled while the yen and U.S. Treasuries rose on Friday, as concerns about technology company valuations and geopolitical hotspots weighed on sentiment.

Chinese equities fell while stocks in Japan and South Korea were volatile after glowing results from artificial intelligence sector bellwether Nvidia failed to impress investors, dragging Wall Street lower. Gold and crude prices edged higher.

An Omani mediator of U.S. and Iran nuclear talks gave an optimistic readout over the latest round of negotiations, but signs of a breakthrough that would avert potential U.S. strikes remained elusive. Elsewhere, Pakistan's defence minister spoke of "open war" against Afghanistan after overnight bombings of Taliban government targets.

"AI and geopolitics remained front and centre for financial markets, prompting a retreat from risk assets and a shift towards safe havens," Mantas Vanagas, senior economist at Westpac Group, wrote in a note. 

"With no major breakthroughs announced in the U.S.–Iran talks, crude markets remained in wait-and-see mode, continuing to price in a significant risk of military escalation between the two countries," he said.

MSCI's broadest index of Asia-Pacific shares outside Japan was flat while Japan's Nikkei stock index rose 0.22%. China's blue-chip CSI300 index was down 0.34% while South Korea's Kospi slid 0.6%.

Nvidia posted better-than-expected results for the January quarter on Wednesday and forecast current-quarter revenue above market estimates. But U.S. shares ended lower and the company's stock was flat in after-hours trading.

"It seems 'the Street' simply wanted more, or perhaps just isn't prepared to chase the stock at its current lofty valuation," IG market analyst Tony Sycamore said about Nvidia's results in a note.

The dollar index, which measures the greenback against a basket of currencies, fell 0.05% to 97.68, with the euro up 0.09% at $1.1808. The yen strengthened 0.2% to 155.78 per dollar.

The U.S. and Iran plan to resume negotiations over Tehran's nuclear programme after consultations in their countries' capitals, Omani Foreign Minister Sayyid Badr Albusaidi said in a post on X after the day's meetings in Switzerland. 

Any substantial move forward could curb chances for U.S. President Donald Trump to carry out a threatened attack on Iran that many fear could escalate into a wider war. Tensions also flared between Pakistan and its northern neighbour, with air and ground strikes against Taliban posts, headquarters and ammunition depots in multiple sectors along the border.

U.S. crude rose 0.54% to $65.56 a barrel, and Brent rose to $71.00 per barrel, up 0.35% on the day. Spot gold rose 0.15% to $5,194.48 an ounce. 

The yield on benchmark U.S. 10-year notes fell 1.7 basis points to 4%. The 30-year bond yield fell 1.3 basis points to 4.6556% from 4.669% late on Thursday.

Data in Japan showed cooling inflation in Tokyo and weaker-than-expected factory output, complicating the case for policy rate increases by the central bank. The data came on the heels of Prime Minister Sanae Takaichi putting forward two Bank of Japan board nominees who share her dovish mindset. 

Japanese Finance Minister Satsuki Katayama signalled heightened vigilance over currency moves, telling parliament the government is monitoring the yen's recent drop with a strong sense of urgency.

Sterling rose 0.07% to $1.3489 after British Prime Minister Keir Starmer's Labour Party suffered an election defeat in an area of Greater Manchester that it had dominated for almost a century. The left-wing Green Party's Hannah Spencer won the contest for the vacant parliamentary seat of Gorton and Denton, with Nigel Farage's anti-immigration Reform UK party coming second, and Labour pushed into third place.

In early European trade, the Euro Stoxx 50 futures were up 0.1% at 6,176, German DAX futures rose 0.07% at 25,330, and FTSE futures added 0.24% at 10,859.5. U.S. stock futures, the S&P 500 e-minis, were down 0.23% at 6,903.8.

(Reporting by Rocky Swift; Editing by Tom Hogue and Sam Holmes)