Major stock markets across the Asia-Pacific region closed the final trading session of 2025 mostly lower, as investor caution ahead of the New Year holiday and weak cues from Wall Street dampened sentiment.
Key Indices See Year-End Decline
On Wednesday, December 31, 2025, regional benchmarks painted a negative picture. Hong Kong's Hang Seng Index (HSI) fell by over 224 points to settle at 25,630. Japan's Nikkei also traded in the red, shedding 187 points or 0.3%. In mainland China, both the Shanghai and Shenzhen composites were down by 0.07% and 0.67% respectively, as of 10:35 AM India Standard Time (IST). South Korea's Kospi index dropped 6 points to 4,214. Trading activity was subdued across the board, with thin volumes attributed to the ongoing holiday season.
Global Drivers and Domestic Data
The regional slump followed a muted session on Wall Street, where major U.S. indices finished slightly lower on Tuesday. A persistent source of investor unease has been stretched valuations in stocks linked to artificial intelligence (AI). Despite the year-end pullback, both U.S. and most Asian markets are poised to register solid gains for the full calendar year of 2025. This strength was fueled by a powerful rally in technology shares and a shift towards easier monetary policy by central banks.
In a positive domestic signal, fresh official data from China indicated that factory activity edged up marginally in December. This offered a glimmer of hope at the close of a largely subdued year for the world's second-largest economy.
Monetary Policy and Commodities Outlook
A key pillar of global market strength in 2025 has been the U.S. Federal Reserve's pivot towards monetary easing in the latter half of the year, coupled with massive investment flows into AI technologies. Minutes from the Fed's December policy meeting, released recently, showed that most officials view further interest rate cuts as appropriate, provided inflation continues to cool as expected.
In the commodities space, precious metals presented a steadier picture after recent volatility. Acting as classic safe-haven assets amid ongoing geopolitical tensions, both gold and silver had touched record highs last week before retreating. They managed to hold their ground on this final trading day.
The uneven performance across assets underscores a market in transition, balancing optimism over technological innovation and easier money against concerns over rich valuations and global economic headwinds as it steps into 2026.
