Asian Stocks Edge Higher as DeepSeek Selloff Eases; Australia Leads on Rate Cut Bets
Most Asian stocks advanced on Wednesday as the sharp selloff in technology shares, driven by concerns over DeepSeek—a newly introduced Chinese artificial intelligence model—began to subside.
Australia Outperforms on Soft Inflation Data
Australian markets led gains in the region, climbing to a near two-month high after softer-than-expected consumer price index (CPI) data fueled speculation that the Reserve Bank of Australia (RBA) could cut interest rates soon.
Trading volumes across Asia were subdued due to market holidays in China, Hong Kong, Taiwan, Singapore, and South Korea for the Lunar New Year. Chinese markets will remain closed for the rest of the week.
Wall Street Rebound Lifts Sentiment, But Fed Decision Looms
Asian markets took cues from Wall Street, where major technology stocks rebounded strongly after Monday’s sharp losses. However, U.S. stock index futures slipped during Asian trade, as investors awaited the Federal Reserve’s policy decision later in the day. The central bank is widely expected to maintain interest rates and adopt a cautious stance.
Investor focus is also on fourth-quarter earnings reports from major U.S. tech firms, with Microsoft (NASDAQ: MSFT), Tesla (NASDAQ: TSLA), ASML (NASDAQ: ASML), and Alibaba Group (NYSE: BABA, HK: 9988) set to release their results later on Wednesday.
Tech Stocks Recover from DeepSeek Selloff
Asian technology stocks saw some stabilization on Wednesday following a two-day rout triggered by concerns over DeepSeek. Japanese tech heavyweights such as Advantest Corp. (TYO: 6857), Tokyo Electron Ltd. (TYO: 8035), and SoftBank Group Corp. (TYO: 9984) steadied, while Renesas Electronics Corp. (TYO: 6723) gained 2.7%. Sony Corp. (TYO: 6758) jumped 4.1% after announcing that President Hiroki Totoki will take over as CEO from April 1, succeeding Kenichiro Yoshida, who will remain Chairman.
Gains in tech stocks helped the Nikkei 225 rise 0.5% after two days of steep declines, while the TOPIX index climbed 0.6%, benefiting from its lower exposure to technology stocks.
The recent slump in chipmakers was driven by the launch of China’s DeepSeek R1—an AI program that reportedly rivals ChatGPT’s capabilities despite running on older hardware and a significantly lower budget. The breakthrough raised concerns about the massive investments flowing into AI infrastructure, questioning whether companies should shift focus to more cost-efficient models.
Australian Stocks Hit Two-Month High on Rate Cut Hopes
Australia’s ASX 200 index gained 0.9%, reaching its highest level since early December after inflation data showed weaker-than-expected CPI growth in the fourth quarter.
The softer reading strengthened market expectations that the RBA could begin cutting interest rates as early as February, boosting risk appetite. Analysts at ANZ noted that the CPI report could justify a 25-basis-point rate cut next month.
However, underlying inflation remains well above the RBA’s 2% to 3% target range, limiting the extent to which the central bank can ease monetary policy.
Elsewhere in Asia, futures for India’s Nifty 50 index pointed to a flat open, as the index struggled to rebound from a more-than seven-month low hit earlier this week.
