• MSCI Asia-Pacific index slides from Friday’s four-month high
• Nvidia Corp.’s earnings due; traders line up volatility hedges

Stocks in Asia drifted at the start of the week as traders refrained from making riskier bets after lackluster economic data spurred a selloff on Wall Street. The dollar declined against its peers, notably the euro.

Benchmarks in Hong Kong and mainland China, which got a lift from technology stocks this year, traded in tight range. A gauge of Asian equities edged lower after hitting a four-month high Friday. US equity index futures advanced, as did contracts on Germany’s benchmark stock index after the conservative party came in first in the country’s federal election.

The prospects for artificial intelligence has fueled a rally in Chinese technology stocks, offsetting the risks from US tariffs and shifting wagers on Federal Reserve policy easing. Data late last week showed US inflation expectations rising to the highest level in almost three decades.

“People have not believed in the innovation power of China but also it’s massively under-owned by foreigners,” said Virginie Maisonneuve, global chief investment officer equity at Allianz Global Investors. “I do think you will see some allocation from global funds into China, particularly into the tech area.”

Chinese tech shares have staged a bull run this year, driven by optimism over DeepSeek and Xi’s meeting with major business leaders, including Alibaba Group Holding Ltd. co-founder Jack Ma. The euro area’s leading blue-chip index gained nearly 12% during that time span, outperforming the S&P 500.

One of the highlights of the week will be Nvidia Corp.’s earnings on Wednesday. Investors have started to boost bets that volatility will come back, with the tech firm’s results the first in a series of events with the potential to send the market into a tailspin.

Treasury futures slipped on Monday. There was no cash Treasuries trading in Asia, as Japan’s markets were closed for a holiday on Monday.

A gauge of the dollar weakened during early Asian trading. The euro outperformed among Group of 10 currencies, up 0.5% against the dollar after Germany’s conservative leader Friedrich Merz said he’ll move quickly to form a new government following Sunday’s federal election victory.

In Asia, diagnostic kits and vaccine maker shares climbed as researchers in China said they discovered a new coronavirus in bats that enters cells using the same gateway as the virus that causes Covid-19.

Read More: Covid-Like Bat Virus Discovered by Researchers in Chinese Lab

Tariff Tensions

Chinese Vice Premier He Lifeng expressed “serious concern” over President Donald Trump’s 10% tariff hike on Chinese goods in a call with Treasury Secretary Scott Bessent, China Central Television reported Friday. For his part, Bessent also signaled concerns on a host of issues with China, including “economic imbalances,” the US Treasury said.

Read More: Trump Directs CFIUS to Restrict Chinese Investments in US (1)

The Trump administration told Mexican officials that they should put their own duties on Chinese imports as part of their efforts to avoid tariffs threatened by the US president, according to people familiar with the matter.

Separately, Trump is directing the Committee on Foreign Investment in the United States to restrict Chinese spending on technology, energy and other strategic US sectors, his administration’s latest salvo against the world’s second-largest economy.

In corporate news, Berkshire Hathaway Inc. is looking to increase ownership in Japan’s five largest trading houses “over time,” Warren Buffett said in an annual letter to shareholders.

In commodities, oil held a decline as the prospect of increased supply from Iraq weighed on prices. Gold traded just shy of last week’s all-time high as unexpectedly weak economic data and rising expectations for inflation helped boost haven demand.