Asian shares gain as bitcoin rockets on news of US government strategic reserve

US President Donald Trump on social media announced five digital assets he expected to include in a new reserve, including bitcoin, ether, XRP, solana and cardano.

Asian share markets made guarded gains on Monday as investors anxiously awaited imminent U.S. tariffs, while bitcoin surged on news it would be included in a new American strategic reserve of cryptocurrencies.

U.S. President Donald Trump announced on social media five digital assets he planned to add to the new reserve, which will be used to "respond to the economic and financial challenges posed by the metaverse, Web3, and the global cryptocurrency revolution."

The president's post came after reports that the administration was planning to create a strategic reserve of cryptocurrencies, similar to the U.S. oil reserve.

Bitcoin, the world's largest cryptocurrency by market value, shot up 10% to $92,905, while ether, the second-largest cryptocurrency, pulled back to $2,443 after rising 13% over the weekend.

MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.3%, while Japan's Nikkei rose 1.0%. Chinese blue chips added 0.8%, helped by a pick-up in the Caixin/S&P manufacturing PMI to 50.8 in February, from 50.1.

S&P 500 futures and Nasdaq futures were both flat, having staged a late rally on Friday after a week of heavy losses.

EUROSTOXX 50 futures firmed 0.3%, while FTSE futures and DAX futures rose 0.6%.

Investors seemed encouraged that 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.

"We discussed the urgent need for a political solution to the war in Ukraine," German Chancellor Olaf Scholz said on Sunday after a meeting with French President Emmanuel Macron and European Commission President Ursula von der Leyen.

The meeting was held to coordinate economic and military support for Kyiv and to prepare for a new round of peace talks.

"We agreed to draw up a peace plan that we can then present to the United States," Scholz added.

RISING TARIFFS

Furthermore, worries about the health of the U.S. economy were 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 realised 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 now imply 69 basis points of easing by December, compared with 46 basis points a week ago. Yields on 10-year Treasuries 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 speak 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.

In currency markets, the euro edged up 0.5% to $1.0421 on hopes for progress in a Russian-Ukrainian peace deal, having been as low as $1.0360 on Friday.

The dollar eased back to 1.4445 Canadian dollars after rising 1.7% last week, and dipped to 20.4586 Mexican pesos.

It edged lower on the Japanese yen to 150.32 yen, while the dollar index was down slightly at 107.180.

Gold prices firmed 0.5% to $2,873 an