GLOBAL MARKETS-Shares subdued in Asia by holidays, dismal Japan data

By Wayne Cole

SYDNEY, Feb 16 (Reuters) - Asian shares quietly consolidated recent hefty gains on Monday as the Lunar New Year holiday made for thin trading, while dismal economic data out of Japan took some air out of that booming market.

China, South Korea, Taiwan were among the markets that were closed, leaving currencies and bonds becalmed, but precious metals under fresh pressure.

Japan reported its economy grew a miserly 0.2% annualised in the December quarter, far below the 1.6% gain forecast as government spending dragged on activity.

The disappointing figures underline the tough task ahead for Prime Minister Sanae Takaichi and should support her push for more aggressive fiscal stimulus.

Japan's Nikkei .N225 edged up 0.2%, having climbed 5% last week. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS firmed 0.4%.

South Korea's .KS11 tech-heavy market surged 8.2% last week, while Taiwan .TWII climbed almost 6% for the week.

"Our fear in Asia is that if the mega-cap technology companies announce a pause in capital expenditure, that might lead to a sharp correction in memory stocks that have rallied sharply in markets like Korea this year," said Nick Ferres, chief investment officer at Vantage Point.

"While rotation is likely to favour emerging markets, we are becoming increasingly cautious on memory stocks in Korea and Taiwan following their exceptional performance and re-rating."

For Europe, EUROSTOXX 50 futures STXEc1 rose 0.1%, while DAX futures FDXc1 and FTSE futures FFIc1 added 0.2%.

S&P 500 futures ESc1 gained 0.2%, while Nasdaq futures NQc1 rose 0.1%.

The major data of the week are not out until Friday when surveys of global manufacturing hit and the U.S. reports gross domestic product for the fourth quarter.

Median forecasts are for annualised growth of 3.0%, down from 4.4% the previous quarter but still solid.

MORE CAPEX MEANS FEWER BUYBACKS

Earnings season continues in the U.S., with the star attraction being Walmart WMT.O, which will provide a gauge on consumer spending trends after a disappointing December for retail sales.

The retailer's stock has jumped 20% this year, taking its market capitalisation above $1 trillion and making it by far the biggest company by market value in the consumer staples sector .SPLRCS, which is up 15% in 2026.

Defensive stocks have benefited from a rotation out of tech amid concerns about the huge cost of AI capex and the disruptive effect of AI competition on sectors such as software, which has shed 24% in market value in the past three months.

Hyperscaler capex plans have ballooned to $660 billion, $120 billion higher than at the start of the earnings season.

Analysts at Goldman Sachs noted that as capex has surged, S&P 500 buybacks have dropped by 7% from a year ago.

"This marks the third consecutive quarter of stagnation," they wrote in a note. "We expect the increasing scarcity of free cash flows and buybacks will strengthen the premium for companies focused on returning cash flows to shareholders."

There is no lack of cash flowing into bond markets as money exited stocks and U.S. economic data underpinned the case for more rate cuts from the Federal Reserve.

Yields on two-year Treasuries US2YT=RR fell to 3.408% on Friday, the lowest close since mid-2022. Futures imply a 68% chance the Fed will cut in June and have 62 basis points of easing priced in for the year. 0#USDIRPR

The drop in yields pulled the dollar index down 0.8% last week to 96.890 =USD, with most of the losses against a rebounding Japanese yen.

The dollar was 0.2% firmer on Monday at 153.05 yen JPY=EBS, having sunk 2.9% last week, while the euro was flat at $1.1866 EUR=EBS.

The dollar also shed 1% on the Swiss franc last week, while the euro slid under 0.9100 francs for the first time since 2015.

The relentless rise of the franc has markets on alert for possible intervention from the Swiss National Bank given inflation is already at 0.1%, close to the bottom of its 0% to 2% target band.

In commodity markets, gold slid 1.3% to $4,973 an ounce XAU=, having swung wildly in recent weeks as some investors were squeezed out of leveraged positions. Silver XAG= lost 3% to $75.05 an ounce. GOL/

Oil prices were steady as investors digested a Reuters report that OPEC is leaning towards a resumption of oil output increases from April. O/R

Brent LCOc1 was flat at $67.77 a barrel, while U.S. crude CLc1 barely budged at $62.91 per barrel.