Asian markets opened the new trading week on Monday, January 26, with a cautious and uneven tone as investors digested currency volatility, regional policy expectations, and reduced participation due to public holidays. While select equity benchmarks managed modest gains, losses in Japan and India underscored lingering concerns around valuations, monetary policy, and global risk sentiment.

Currency Strength Shapes the Regional Narrative

Currency markets were a notable focal point in the Asian morning session. The Japanese Yen Index surged 1.74 percent to 64.23, marking one of its strongest single-session moves in recent weeks. The advance comes amid ongoing speculation that the Bank of Japan may continue shifting toward a less accommodative stance, prompting investors to reassess yen-denominated assets. A stronger yen, however, often weighs on Japanese exporters, contributing to equity market pressure.

The Australian Dollar Index also advanced, rising 0.78 percent to 68.93. Despite thinner trading conditions as the Sydney Stock Exchange observes Australia Day, the currency’s strength reflects underlying confidence in Australia’s commodity exposure and relative macro stability. Currency appreciation across the region suggests investors are positioning more defensively, favoring perceived monetary credibility and balance sheet strength over high-beta equity exposure.

Equity Markets Diverge Across Asia

Equity performance across Asia remained mixed as markets balanced local dynamics against broader global cues. In China, the SSE Composite Index edged higher by 0.33 percent to 4,136.16, supported by selective buying in large-cap and state-linked names. Investor sentiment remains sensitive to policy signals from Beijing, with expectations that targeted support measures could stabilize growth without triggering excessive leverage.

Hong Kong’s Hang Seng Index traded flat at 26,749.51, reflecting indecision among investors as technology and financial stocks offset weakness in property-related names. The lack of clear direction suggests market participants are waiting for fresh catalysts, including earnings updates and potential regulatory signals.

South Korea’s KOSPI Composite slipped 0.17 percent to 4,981.60, extending recent consolidation. Semiconductor and export-oriented stocks faced mild pressure, as investors weighed global demand trends against elevated valuations.

Japan and India Face Downward Pressure

Japanese equities were among the weakest performers in the region, with the Nikkei 225 falling 1.64 percent to 52,965.98. The stronger yen weighed heavily on export-heavy sectors, while profit-taking emerged after the index’s recent highs. Investors are increasingly sensitive to any signs that tighter financial conditions could slow earnings momentum.

In India, the S&P BSE SENSEX declined 0.94 percent to 81,537.70. Trading volumes were notably light as India’s National Stock Exchange is closed for Republic Day, limiting broader market participation. The decline reflects cautious positioning after recent gains, with investors reassessing domestic valuations amid global uncertainty and upcoming economic data.

Outlook: What Investors Are Watching Next

Looking ahead, Asian markets are likely to remain sensitive to currency movements, central bank communication, and shifts in global risk appetite. Reduced liquidity due to regional holidays, including Australia Day, India’s Republic Day, and Al Isra’ wal-Mi’raj in Oman, could continue to amplify short-term volatility. Investors will be closely monitoring signals from major central banks, particularly the Bank of Japan, as well as economic data from China and the United States. Opportunities may emerge in markets showing policy support and earnings visibility, while risks remain elevated for export-heavy equities facing currency headwinds. As the week unfolds, clarity on macro direction and global sentiment will be key drivers shaping Asia’s near-term market trajectory.