Asian markets closed mostly higher on Thursday, December 4, marking a strong session driven by Japan’s impressive rally and improving sentiment across several key economies. The trading day demonstrated a clear divergence between markets benefiting from global tailwinds—such as Japan, Hong Kong, and Australia—and those continuing to struggle under domestic economic pressures, notably China and South Korea.

Investors remained focused on currency movements, central bank commentary, and the evolving global inflation outlook. With risk appetite improving, equity markets across Asia found support from stronger economic signals in advanced economies and firm corporate performance within the region.

Nikkei 225 Leads Regional Gains with a Strong 2.33% Surge

Japan’s Nikkei 225 jumped 2.33% to 51,028.42, marking one of its strongest moves in recent weeks and extending its upward trajectory into December. The rally was powered by gains across technology, automotive, and manufacturing sectors—industries that benefited from an improved earnings outlook and supportive monetary conditions.

The Japanese yen strengthened 0.44%, yet markets continued to climb, underscoring robust investor conviction in Japan’s economic resilience. Analysts noted that recent reforms, rising corporate profits, and greater shareholder focus among Japanese companies have contributed to the Nikkei’s sustained momentum.

Speculation that the Bank of Japan will continue gradual and predictable policy adjustments has helped calm markets, allowing equities to benefit from stable macroeconomic conditions. The Nikkei’s performance also reflects global confidence in Japan’s role as a key manufacturing and technology hub.

Broad Gains Across Hong Kong, Australia, and India

Hong Kong’s Hang Seng Index advanced 0.68% to 25,935.90, supported by gains in technology, banking, and consumer stocks. While the market remains sensitive to China’s economic challenges, pockets of strength suggest improving investor willingness to re-engage with undervalued sectors. Stabilizing capital flows and reassurances around liquidity have contributed to a more constructive tone in Hong Kong.

Australia’s S&P/ASX 200 rose 0.27% to 8,618.40, lifted by mining, industrials, and financials. The Australian Dollar Index climbed 0.52%, reflecting enhanced confidence in Australia’s commodity-driven economy as global demand indicators improved. Despite its modest rise, the ASX continues to show resilience, supported by strong corporate balance sheets and a disciplined monetary environment.

India’s S&P BSE Sensex added 0.22% to 85,293.64, marking another steady session for one of Asia’s most stable markets. Domestic consumption, foreign investment flows, and strong corporate earnings have underpinned India’s relative outperformance throughout the year. Even with slight profit-taking in some sectors, the Sensex remains well-positioned heading into 2026.

China and South Korea Lag as Structural Pressures Persist

China’s SSE Composite Index slipped 0.56% to 3,875.79, continuing its downward trend as economic concerns overshadowed broader regional optimism. Weakness in property-related industries, slower consumer recovery, and uncertain policy direction have limited China’s upside potential. Investors remain cautious, waiting for more decisive stabilization measures from Beijing.

South Korea’s KOSPI Composite Index declined 0.19% to 4,028.51, pressured by volatility in semiconductor stocks despite strong year-to-date gains. While the long-term outlook for Korea’s tech sector remains positive, short-term fluctuations related to global chip demand cycles continue to weigh on the index.

Currency movements also influenced investor behavior. The strengthening Japanese yen and Australian dollar contrasted with concerns surrounding China’s economic momentum, contributing to performance divergence across markets.

Outlook: Watching Policy Guidance, China’s Recovery Trajectory, and Year-End Market Flows

Heading into the final weeks of the year, investors will be closely monitoring policy developments from major central banks, with particular attention on the Federal Reserve and the Bank of Japan. China’s economic recovery remains a pivotal factor, as clearer policy direction could help stabilize regional sentiment. Additionally, currency trends and year-end portfolio rebalancing may create pockets of volatility across Asia. Despite these risks, improving global conditions and strong momentum in Japan and India suggest that Asian markets may continue to find support as 2025 draws to a close.