Asian stock markets delivered a fragmented performance on Monday, 29 December 2025, as thin holiday trading followed a lacklustre post-Christmas session on Wall Street. The muted activity unfolded against a backdrop of heightened geopolitical friction surrounding Taiwan.
Geopolitical Strains Cast a Shadow
The Chinese military announced it had deployed air, naval, and rocket forces for joint exercises around Taiwan. Beijing, which claims the self-governed island as its territory, stated the drills were a warning against separatist activities and "external interference." In response, Taiwan placed its forces on alert and accused the Beijing government of being "the biggest destroyer of peace."
These manoeuvres came after China expressed anger over recent U.S. arms sales to Taiwan and remarks from Japan's Prime Minister, Sanae Takaichi. She suggested Japan's military could become involved if China took action against the island. Notably, the Chinese military's statement on Monday did not directly mention the United States or Japan.
Regional Markets Show Divergent Paths
Investor reaction across the region was uneven. Taiwan's benchmark index gained 0.8%, showing resilience, while Hong Kong's Hang Seng rose 0.3% to 25,887.33. The Shanghai Composite added 0.3% to reach 3,975.92.
However, Japan's Nikkei 225 slipped 0.2% to 50,663.90. South Korea's Kospi was a standout performer, jumping 1.9% to 4,207.36. Australia's S&P/ASX 200 gave up 0.3%, closing at 8,732.70.
Commodities and Currency Movements
In commodity markets, gold fell 0.4% to $4,535.50 per troy ounce, retreating from recent record highs driven by supply constraints and safe-haven demand. Silver bucked the trend, gaining 3% to $79.87. Analysts note that earlier surges in gold were partly fuelled by worries during the U.S. government shutdown and expectations of further Federal Reserve interest rate cuts in the new year, which would weaken the dollar.
Oil prices recovered some ground after sharp falls on Friday. Early Monday, U.S. benchmark crude gained 60 cents to $57.34 per barrel, while Brent crude, the international standard, advanced 62 cents to $60.86.
In currency markets, the U.S. dollar softened slightly against the Japanese yen, falling to 156.28 yen from 156.56. The euro held steady at $1.1770.
Wall Street's Quiet Finish and Yearly Gains
Trading volume remains light globally, with many institutional investors closed for the year. On Friday, Wall Street indices edged lower in the first session after the Christmas holiday. The S&P 500 fell less than 0.1% to 6,929.94, the Dow Jones Industrial Average also dipped less than 0.1% to 48,710.97, and the Nasdaq composite declined 0.1% to 23,593.10.
Despite the quiet end to the week, the S&P 500 has climbed nearly 18% in 2025 with just three trading days left. This robust annual performance has been supported by the deregulatory policies of the Trump administration and sustained investor optimism regarding the future of artificial intelligence.
