Asian equity markets closed Friday, January 23, 2026, on a constructive note as the region extended its recovery from earlier volatility. Follow-through buying after Thursday’s rebound signaled improving confidence that the early-year pullback is giving way to renewed momentum. Investors continued to rotate back into equities, particularly in North Asian markets offering clearer earnings visibility and supportive policy backdrops.

While gains were generally measured rather than aggressive, the consistency across several major benchmarks reinforced the sense that risk appetite is stabilizing. Strength in regional currencies further supported sentiment, easing concerns around capital outflows and encouraging incremental equity inflows into the end of the trading week.

South Korea and Greater China Continue to Attract Inflows

South Korea’s KOSPI Composite Index rose 0.76% to 4,990.07, extending its leadership position in Asia’s early-2026 performance. Technology and semiconductor stocks again drove the advance, supported by expectations of improving global demand and resilient earnings outlooks. The steady climb underscores sustained investor confidence in Korea’s export-driven economy and its leverage to global manufacturing cycles.

Mainland China’s SSE Composite Index advanced 0.33% to 4,136.16, reinforcing a gradual stabilization trend. Financials and infrastructure-linked stocks led the move as investors remained encouraged by ongoing policy support and improving liquidity conditions. The positive close helped anchor broader regional sentiment, limiting downside pressure across neighboring markets.

Hong Kong’s Hang Seng Index added 0.45% to 26,749.51, benefiting from improved sentiment toward China-linked assets. Large-cap technology and financial stocks attracted renewed interest, reflecting easing selling pressure and a cautious return of confidence following recent volatility.

Japan and Australia Edge Higher as Currency Signals Improve

Japan’s Nikkei 225 rose 0.29% to 53,846.87, extending its recovery after recent consolidation. Exporters and industrial stocks saw selective buying as the Japanese Yen Index slipped 0.05%, offering modest support to overseas earnings. The measured advance suggests investors remain constructive on Japan’s earnings outlook while maintaining valuation discipline after sharp earlier moves.

Australia’s S&P/ASX 200 edged up 0.13% to 8,860.10, supported by gains in mining and energy stocks. Currency markets were more decisive, with the Australian Dollar Index surging 1.15% to 68.39. The sharp move reflected renewed demand for risk-linked currencies and confidence in Australia’s macro outlook, even as a stronger currency introduces longer-term considerations for exporters.

India Underperforms as Caution Persists

India’s S&P BSE Sensex declined 0.82% to 81,631.61, underperforming regional peers. Financials and IT stocks led the retreat as investors continued to reduce exposure following heightened volatility earlier in the week. The move highlighted lingering sensitivity to valuations, even as India’s longer-term growth narrative remains underpinned by domestic consumption and infrastructure investment.

The divergence between India and North Asia underscored growing selectivity among investors, with capital favoring markets offering clearer near-term earnings visibility and stronger policy support.

Outlook

Asian markets appear to be entering a more stable phase as risk appetite gradually rebuilds following January’s volatility. Investor focus will now shift toward upcoming corporate earnings, macroeconomic data, and central bank guidance to assess whether the recovery can broaden and sustain momentum. Currency trends—particularly the strength of the Australian dollar and movements in the yen—will remain important drivers of sector performance.

While pockets of volatility may persist, the steady gains seen over the past two sessions suggest confidence is returning. As markets transition deeper into the first quarter of 2026, Asia appears positioned for selective upside rather than indiscriminate rallies, with leadership likely to remain concentrated in economies showing earnings resilience and policy clarity.