San Francisco Frontiers - Stocks track Wall St gains, Seoul brushes off tariff threat

The yen held its gains after a two-day surge stoked by intervention talk, while geopolitical and economic uncertainty saw silver hit another fresh peak and gold hover just below its own high.

Traders are also gearing up for a Federal Reserve policy meeting and earnings from tech titans, which will be pored over for an idea about sustainability of the AI investment surge.

Equities enjoyed healthy buying despite the US president reverting to tariff threats, warning South Korea he would impose 25 percent tolls on goods including autos for falling short of expectations on an earlier pact struck with Washington.

The announcement comes months after the two sides struck a trade and security deal following tense negotiations, setting levies at 15 percent.

"South Korea's Legislature is not living up to its Deal with the United States," Trump wrote on his Truth Social platform.

He added that he was increasing tariff rates "because the Korean Legislature hasn't enacted our Historic Trade Agreement, which is their prerogative".

The presidential office in Seoul said it had not been informed in advance but added that Trade Minister Kim Jung-kwan, currently in Canada, would head to Washington for talks with US Commerce Secretary Howard Lutnick.

Trump's outburst follows a warning to Canada on Saturday that it faced 100 percent levies if it signed a trade deal with China, days after backing down from a threat to hit several European countries with measures over their opposition to his grab for Greenland.

Still, Seoul's Kospi continued its run to fresh record highs by jumping 2.8 percent, with observers pointing to the US president's history of rowing back the worst of his threats.

While carmakers slipped, tech firms ploughed higher with chipmaking giant SK hynix up 8.7 percent and Samsung Electronics up 4.8 percent.

There were also big gains in Hong Kong, Shanghai, Sydney, Singapore, Taipei, Bangkok, Manila and Jakarta.

London, Paris and Frankfurt all opened with gains.

- India-EU trade deal -

Mumbai advanced in early trade after India and the European Union unveiled a free-trade deal totalling about a quarter of global GDP, following two decades of negotiations.

Indian Prime Minister Narendra Modi said the agreement "will bring many opportunities for India's 1.4 billion and many millions of people of the EU".

Tech firms are enjoying a fresh boost ahead of earnings releases as traders continue to pile into all things AI.

Magnificent Seven members Apple, Microsoft, Meta and Tesla are due this week, with other bellwethers including Texas Instruments, Boeing and Mastercard providing an idea about the state of the economy.

However, with questions being asked about the amount of cash being invested in artificial intelligence, there is a little nervousness on trading floors about when profits will be realised.

"The AI capex cycle is increasingly colliding with the real world: debt markets, power grids, and regulation," wrote Matt Weller, head of market research at City Index.

He added that "2026 capex estimates for the largest 'hyperscalers' is widely forecast to hit the $600 bn+ range, driven primarily by AI infrastructure. At the same time, major tech firms have leaned more heavily into debt issuance to fund the infrastructure race".

"This matters for earnings because the market's attention is moving from 'who spends the most' to 'who can sustain the spend without eroding free cash flow', especially if AI monetisation takes longer than expected."

Developments in Washington are also being followed after some senators warned they would vote against upcoming spending bills following the second killing of a US citizen in Minneapolis, threatening another possible government shutdown.

The dollar remained under pressure after its latest selloff sparked by talk of a joint intervention between US and Japanese authorities to support the yen.

And in corporate news, Hong Kong-listed shares in China's Zijin Gold International rose 1.5 percent after it agreed to buy Allied Gold, which owns gold mines in Africa, for US$4 billion. Its parent, Zijin Mining Group, soared more than six percent before paring the gains.

Zijin Gold's shares have tripled since listing in September.

- Key figures at around 0815 GMT -

Tokyo - Nikkei 225: UP 0.9 percent at 53,333.54 (close)

Hong Kong - Hang Seng Index: UP 1.4 percent at 27,126.95 (close)

Shanghai - Composite: UP 0.2 percent at 4,139.90 (close)

London - FTSE 100: UP 0.3 percent at 10,177.21

Dollar/yen: UP at 154.73 yen from 153.98 yen on Monday

Euro/dollar: DOWN at $1.1870 from $1.1883

Pound/dollar: UP at $1.3684 from $1.3682

Euro/pound: DOWN at 86.74 pence from 86.85 pence

West Texas Intermediate: DOWN 0.5 percent at $60.37 per barrel

Brent North Sea Crude: DOWN 0.6 percent at $65.23 per barrel

M.Gonzalez--SFF