A look at the day ahead in European and global markets from

Wayne Cole.

It's been a mostly upbeat start to the week for Asian

shares, even though a holiday in U.S. markets has thinned

liquidity. Hong Kong led the way again, tacking another 1.4%

onto last week's 7% jump amid optimism about potential low-cost

AI adoption following the DeepSeek reveal.

Goldman Sachs has raised its outlookfor Chinese growth and

stocks, arguing that widespread adoption of AI could raise

earnings per share by 2.5% a year over the next decade. It would

also lift the fair value of Chinese equity by 15% to 20% and

attract $200 billion of fund inflows.

The rush has been led by a 24% jump in Alibaba ( BABA ) on

news it would partner with Apple ( AAPL ) to support iPhones'

artificial intelligence services offering in China. Alibaba ( BABA )

reports earnings on Thursday and options imply the share could

move 7.5% in either direction on the results.

The pan-European STOXX 600 index has also been

attracting global funds, having climbed for eight straight weeks

and up 8% since the turn of the year. EUROSTOXX 50 futures

and DAX futures were both a fraction higher on

Monday.

Japan's Nikkei has been muted by a rising yen, which offset

news of a strong 2.8% rise in annualised economic growth for the

fourth quarter. Oddly, markets still only imply a minor chance

of the Bank of Japan hiking again in March, presumably because

that will be before the main round of wage negotiations is

finished.

Even a May move is only priced at a one-in-four chance,

which seems far too low given the run of data and the BOJ's

hawkish commentary.

The GDP surprise did help the yen push up to 151.55 per

dollar. The U.S. currency has been on the back foot since a

surprisingly weak January retail sales report challenged the

whole economic "exceptionalism" meme.

Markets are back to wagering on two Fed rate cuts this year

rather than one, with a move in June better than 50-50.

Central banks in Australia and New Zealand hold policy

meetings this week and are both expected to cut interest rates,

the former by 25 basis points and the latter by twice that.

Geopolitics remained in focus with reports that talks on

the Russia-Ukraine conflict will begin in Saudi Arabia this

week, though the participants are not entirely clear.

French President Emmanuel Macron will host an emergency

European summit on Monday after U.S. officials suggested Europe

would have no role in ending the conflict, a peace process that

will seemingly be conducted between the U.S. and Russia.

Key developments that could influence markets on Monday:

- Eurozone finance ministers meet in Brussels

- Appearances by Fed Bank of Philadelphia President Patrick

Harker and Fed Board Governor Michelle Bowman