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Asia shares track Wall St, rise on possible shift in US

trade

policy

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Stock futures suggest weak opening for Europe

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Euro zone inflation data due later on Tuesday

(Updates to Asia afternoon)

By Rae Wee

SINGAPORE, Jan 7 (Reuters) - Asia's shares followed Wall

Street's positive lead on Tuesday as some investors hoped U.S.

President-elect Donald Trump would adopt less aggressive tariffs

than previously thought when he takes office.

MSCI's broadest index of Asia-Pacific shares outside Japan

was up 0.03%, while Japan's Nikkei

jumped 2%, boosted by a rally in technology stocks.

Stocks in Europe, however, looked set for a negative start

after Monday's gain. EUROSTOXX 50 futures fell 0.5%,

while FTSE futures retreated 0.47%.

In the U.S., S&P 500 futures slipped 0.07%. Nasdaq

futures lost 0.16% after the underlying indexes rose on

Monday to more than a one-week high.

The Washington Post reported on Monday that Trump aides were

exploring tariff plans that would be applied to every country

but only cover certain sectors deemed critical to national or

economic security, in what would represent a marked softening

from promises Trump had made during the 2024 presidential

campaign.

While the news initially sent stocks rallying and the dollar

falling, Trump's subsequent denial on his Truth Social platform

reversed some of the U.S. currency's declines.

"No one really knows for sure what kind of tariffs or trade

policies the Trump administration will implement," said Khoon

Goh, head of Asia research at ANZ.

"It's still possible that what the Washington Post reported

is true. His officials and aides of course will go through and

come up with various options, but ultimately it's up to Trump to

decide.

"For now, he is still talking tough on tariffs. But we know

from experience from his first term that he is a person that is

open to doing deals. I think that's partly why markets at this

stage are not reacting too negatively."

The dollar hovered near a one-week low at 108.12,

nursing some losses from the previous session.

The euro and sterling extended gains from

the previous session, each rising more than 0.1% to trade at

$1.0402 and $1.25395, respectively.

In China, the CSI300 index and Shanghai Composite

Index reversed early losses to gain 0.28% and 0.17%,

respectively.

Hong Kong's Hang Seng Index slumped 1.89%.

China's main stock exchanges asked some large mutual funds

to restrict stock selling at the start of the year, three

sources familiar with the matter said, as authorities sought to

calm markets heading into a tricky period for the world's

second-largest economy.

DATA DUMP

Inflation figures from the euro zone later on Tuesday will

refine the outlook for more rate cuts from the European Central

Bank. Markets are pricing in nearly 100 basis points worth of

easing in 2025 for now.

The week is filled with data releases particularly from the

United States, which will be headlined by the December nonfarm

payrolls report on Friday.

That will be previewed by data on ADP hiring, job openings

and weekly jobless claims.

Anything upbeat would support the case for fewer rate cuts

from the Federal Reserve. Markets have already scaled back

expectations to just 40 basis points for 2025.

Minutes of the Fed's latest meeting due on Wednesday will

offer colour on their dot-plot predictions, while there will be

plenty of live comment with several top policymakers.

The prospect of a less aggressive Fed easing cycle this year

has in turn kept U.S. Treasury yields supported, with the

benchmark 10-year yield last at 4.6057%, after

rising in the previous session to its highest since May.

The two-year yield steadied at 4.2599%.

Elsewhere, the dollar notched up a six-month high against

the Japanese yen at 158.425.

The Canadian dollar strengthened to 1.4311 per U.S.

dollar, extending a rally on Monday after Canadian Prime

Minister Justin Trudeau said he would step down in the coming

months.

"Should Canada move toward an early election in which a

Conservative-led government emerges, the CAD could appreciate,"

said Thierry Wizman, global FX and rates strategist at

Macquarie.

"This is based on the view that certain outcomes will likely

improve for Canada under a Conservative-led government, and even

in anticipation of a Conservative-led government."

In commodities, oil prices edged lower on Tuesday, with

Brent falling 0.03% to $76.28 a barrel, while U.S. crude

eased 0.11% to $73.48 per barrel.

Spot gold rose 0.38% to $2,645.41 an ounce.