Asia shares in tense wait for tariff news, bitcoin surges

Asian share markets dithered on Monday as the threat of imminent tariffs lurked in the background, while bitcoin surged on news it would be included in a new U.S. strategic reserve of cryptocurrencies.

U.S. President Donald Trump on social media announced five digital assets he expected to include in a new reserve, including bitcoin BTCUSD, ether (ETH=), XRP (XRP=), solana (SOL=CCCL) and cardano (ADA=CCCL).

Bitcoin, the world's largest cryptocurrency by market value, shot up more than 11% to $94,110, while ether, the second-largest cryptocurrency, climbed 14% to $2,528.

MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) was flat, though Japan's Nikkei NI225 rose 1.1%, helped by a softer yen.

S&P 500 futures ES1! and Nasdaq futures NQ1! were both up 0.1%, having staged a late rally on Friday after a week of heavy losses.

Geopolitical uncertainty lingered as European leaders agreed to draw up a Ukraine peace plan to take to the United States, following President Volodymyr Zelenskiy's clash with Trump in the Oval Office.

Worries about the health of U.S. economy had also been fanned by a string of soft data that had seen the closely watched Atlanta Fed GDPNow tracker swing to an annualised -1.5%, from +2.3%, sparking talk of a possible recession.

Those fears were fanned on Sunday when U.S. Commerce Secretary Howard Lutnick said tariffs on Canada and Mexico will go into effect on Tuesday, but that Trump would determine whether to stick with the planned 25% level.

An extra 10% levy on Chinese imports is also due to come into effect this week, just as the country's National People's Congress opens its third annual session on Wednesday where stimulus measures and possible reprisals against the U.S. could be announced.

"As with other Trump tariff announcements so far, it's hard to know if this is a bluff or a genuine turn in policy," said JPMorgan economist Michael Feroli.

"However, if it were to be realized it would create a significant new headwind to economic activity, as well as an upside support to consumer prices."

PAYROLLS LOOM

All of this raises the stakes for the January U.S. payrolls report due on Friday, where a weak outcome would fuel market bets the Federal Reserve might have to cut interest rates three times this year.

Fed fund futures (0#FF:) now imply 69 basis points of easing by December, compared with 46 basis points a week ago. Yields on 10-year Treasuries US10Y extended their rally with a drop to 4.220%, leaving them down 35 basis points in February, the largest monthly decline since late 2023.

Fed Chair Jerome Powell is due to talk on the economic outlook on Friday, just a few hours after the jobs report, and at least seven other officials will appear this week.

Across the Atlantic, the European Central Bank is widely expected to cut its rates by 25 basis points to 2.50% on Thursday following a run of weak data, and a move under 2% is expected by year-end. (0#EURIRPR)

In currency markets, the euro edged up 0.4% to $1.0416 EURUSD on hopes for progress in a Russian-Ukrainian peace deal, having been as low as $1.0360 on Friday.

The dollar held at 1.4495 Canadian dollar USDCAD, after rising 1.7% last week, and at 20.5010 Mexican pesos USDMXN.

It was firmer on the Japanese yen at 150.98 yen USDJPY, while the dollar index was down slightly at 107.280.

Gold prices inched up 0.5% to $2,873 an ounce GOLD, having dropped around 3% last week.

Oil bounced a little, having slid last week amid speculation the U.S. could ease sanctions on Russian output, while the risk of a global trade war could hit demand for energy.

Brent futures BRN1! rose 35 cents to $73.16 a barrel, while U.S. crude futures CL1! added 30 cents to $70.05 per barrel.

To read Reuters Markets and Finance news, click on https://www.reuters.com/finance/markets For the state of play of Asian stock markets please click on: (0#.INDEXA)