Asian financial markets were treading carefully on Tuesday in holiday-thinned trading, but oil pushed higher with U.S and Iran nuclear negotiations in Geneva due to begin later in the day. Mainland Chinese, Hong Kong, Singapore, Taiwan and South Korea markets were closed on Tuesday for Lunar New Year holidays. U.S markets were shut on Monday for Presidents’ Day. Japan’s Nikkei 225 was down 0.5% and the broader Topix slid 0.2% to 3,779.29. In Australia, the S&P/ASX200 was trading almost 0.5% higher. Ten-year Treasury yields slipped 1 basis point to 4.044% on Tuesday, hitting the lowest since early December. Japan’s five-year yield fell 2 basis points to 1.65%, its lowest since February 2. In early Asian trading hours, Nasdaq futures were down 0.1% and S&P 500 futures up 0.2%.
US stock futures fell sharply on Tuesday as investors remained risk-averse, extending last week’s selloff fuelled by concerns over AI disruption across certain industries. S&P 500 and Nasdaq 100 futures dropped 0.5% and 0.9%, respectively, while Dow futures lost 0.3%. Last week, the Dow fell 1.23%, the S&P 500 declined 1.39%, and the Nasdaq Composite dropped 2.1%. Software names were among the worst performers, as increasingly sophisticated AI tools such as Anthropic PBC’s Claude Cowork intensified fears of structural pressure on traditional software business models.
Gold dropped below $4,960 per ounce on Tuesday, marking a second consecutive session of losses, amid thin trading volumes due to local public holidays in key markets. Markets in China and several countries in Asia remained shut for the Lunar New Year, following a holiday in the US on Monday. Meanwhile, softer-than-expected US inflation data released last Friday boosted expectations for further monetary easing by the Federal Reserve this year. Traders are currently pricing in slightly more than two rate cuts, with July seen as a potential starting point. Investors are now awaiting the Fed’s meeting minutes, the advance estimate of US GDP, and PCE inflation data for clearer guidance on the policy outlook. Geopolitical developments also remain in focus.
WTI crude oil futures edged down to $63.5 per barrel on Tuesday after rising 1.4% in the previous session on heightened tensions between the US and Iran ahead of a second round of talks. Iran on Monday launched a maritime drill in the Strait of Hormuz, a vital oil transit route, following the deployment of a second US aircraft carrier to the region. These moves come as the two nations prepare to resume nuclear talks later today. Iran’s atomic chief has indicated that the country could agree to dilute its most highly enriched uranium in exchange for the full lifting of financial sanctions. Meanwhile, US-led negotiations between Russia and Ukraine are also set to begin later today, though markets remain skeptical about any near-term diplomatic breakthrough.
Australia’s central bank concluded inflation would stay stubbornly high if it had not hiked interest rates as it did this month, and was not yet sure if further tightening would be necessary. Minutes of the Reserve Bank of Australia’s board meeting released on Tuesday showed members were worried that the risks to its inflation and employment mandates had “shifted materially”, making the case to hike the stronger one. “Members agreed that the data received since the previous meeting had strengthened their concern that, without a policy response, inflation would remain persistently above target for too long,” the minutes showed. As a result, the board decided unanimously to raise the cash rate 25 basis points to 3.85%, thus reversing one of the three cuts made in 2025.
The dollar held gains on Tuesday as markets awaited signals, expected later this week, about the potential timing of rate cuts by the Federal Reserve. The yen trimmed losses from a day earlier when worse-than-expected Japanese economic data stirred expectations that the government would ramp up stimulus. The Aussie dollar edged lower after the release of Reserve Bank of Australia’s minutes from its February meeting. Trading was thin with many markets in Asia closed for the Lunar New Year holiday and following the President’s Day holiday in the U.S. Key economic events lie later in the week, with minutes from the Fed’s last meeting and advance figures on U.S. gross domestic product.
U.S. consumer prices increased less than expected in January amid cheaper gasoline and a moderation in rental inflation, but households faced higher costs for services, suggesting little urgency for the Federal Reserve to resume cutting interest rates before summer. The Consumer Price Index report from the Labor Department on Friday showed underlying inflation pressures warmed up last month, likely as businesses pushed through start-of-the-year price increases for goods and services, including personal care, recreation as well as airline fares and hospital services. The slowdown in overall inflation was cheered by the White House, with a spokesperson posting on social media that "America’s economy is set to turbocharge even further through long-overdue interest rate cuts from the Fed."
Many European policymakers appear to still be smarting from U.S. Vice President JD Vance’s tough words about the region at last year’s Munich Security Conference. So, it’s perhaps not too surprising that U.S. Secretary of State Marco Rubio’s comments on Saturday at this year’s event underscoring the U.S. and Europe’s common heritage, goals and challenges have come as something of a relief in European capitals. ″[Rubio] delivered a speech which still assured us that we stand together in this partnership between Europe and the United States,” German Foreign Minister Johann Wadephul told CNBC in an interview on the sidelines of the conference. “Of course, there are some questions which we will have to discuss, but in the end of the day, his message was clear that we were so successful in the past, and we should do the job once again with new threats, with new tests in the 21st century.”
Elon Musk’s SpaceX and its wholly-owned subsidiary xAI are competing in a secret new Pentagon contest to produce voice-controlled, autonomous drone swarming technology, Bloomberg News reported on Monday, citing people familiar with the matter. SpaceX, xAI and the Pentagon’s defense innovation unit did not immediately respond to requests for comment. Reuters could not independently verify the report. Texas-based SpaceX recently acquired xAI in a deal that combined Musk’s major space and defense contractor with the billionaire entrepreneur’s artificial intelligence startup. It occurred ahead of SpaceX’s planned initial public offering this year. Musk’s companies are reportedly among a select few chosen to participate in the $100 million prize challenge initiated in January, according to the Bloomberg report.
Alibaba Group has released its newest AI model series, featuring enhanced capabilities, as it faces intensifying competition in China’s AI space with several models launched in the past week. The Qwen3.5 AI model comes in an open-weight version, which allows users to download, run, fine-tune, and deploy it on their own infrastructure. Alibaba also released a “hosted version,” meaning the model can run on Alibaba’s own servers. Both models were made available on Monday, the eve of the Chinese New Year, and come just a week after Alibaba released a new AI model designed for robots. The company highlighted that Qwen3.5 offers improvements in performance and cost and was built with “native multimodal capabilities,” enabling the models to understand text, images and video simultaneously within one system.
Activist investor Elliott has built a more than 10% stake in Norwegian Cruise Line and plans to push for changes within the cruise operator, the Wall Street Journal reported on Monday, citing people familiar with the matter. Reuters could not immediately verify the WSJ report. Norwegian Cruise Line did not immediately respond to Reuters’ request for comment. According to LSEG-compiled data, Norwegian’s shares lost more than 11% in 2025 even as its rivals Royal Caribbean and Carnival gained on strong demand and higher ticket prices. Last week, Norwegian Cruise appointed former Subway Restaurants CEO John Chidsey as its new boss, replacing Harry Sommer. The company previously said that it expects its fourth-quarter profit, due to be released later this month, to come in below expectations.
Goldman Sachs is preparing to eliminate race, gender identity, sexual orientation, and other diversity-related factors from the criteria its board uses to assess prospective candidates, The Wall Street Journal reported on Monday, citing people familiar with the matter. Since taking office last year, U.S. President Donald Trump has launched a broad campaign against diversity, equity, and inclusion (DEI) practices in both the government and the private sector, alleging that these programs are discriminatory. Several corporate giants including Morgan Stanley and Citi have softened their diversity commitments amid pressure from the Trump administration. Goldman’s decision follows a request from the conservative activist nonprofit National Legal and Policy Centre, a small shareholder in the bank, the WSJ report said, adding that the group submitted a proposal last September urging the firm to remove the DEI criteria.