Asian equity markets closed Thursday, January 2, 2026, on a decisively positive note as investors returned from the year-end break with renewed optimism. The first trading session of the new year saw strong buying interest across much of the region, signaling a reset in sentiment following subdued, low-liquidity conditions at the end of 2025. Risk appetite improved as markets digested stable global macro signals and positioned for a fresh earnings and policy cycle.

The strongest momentum was concentrated in North Asia, where technology-heavy and growth-oriented markets attracted early inflows. While not all indices participated equally, the overall tone reflected confidence that the start of 2026 could bring improved visibility on growth, monetary policy, and corporate performance.

Hong Kong and South Korea Lead the Regional Rally

Hong Kong’s Hang Seng Index surged 2.54% to 26,280.33, delivering the strongest performance in the region. The rally was driven by broad gains across technology, financials, and consumer sectors, as investors returned to China-linked assets after a cautious end to last year. Improved sentiment toward liquidity conditions and selective policy support helped fuel buying, particularly in large-cap internet and banking stocks.

South Korea’s KOSPI Composite Index jumped 2.27% to 4,309.63, reflecting strong demand for technology and semiconductor shares. Investors responded positively to expectations of stabilizing global tech demand and improving earnings visibility in 2026. The sharp advance underscored Korea’s sensitivity to shifts in global risk sentiment, positioning it as one of the early beneficiaries of the new year’s reset.

Together, gains in Hong Kong and Korea set a constructive tone for Asian markets, reinforcing the sense that investors are willing to re-engage after year-end consolidation.

China, India, and Australia Record Steady Advances

China’s SSE Composite Index edged up 0.09% to 3,968.84, continuing a gradual stabilization trend. While gains were modest, the positive close reflected steady investor confidence as markets await clearer guidance on economic momentum and policy direction in early 2026. Financials and infrastructure-linked stocks provided support, while consumer sectors remained mixed.

India’s S&P BSE Sensex rose 0.63% to 85,728.48, extending its resilience into the new year. Financials, industrials, and consumer-oriented stocks led the advance, supported by strong domestic fundamentals and continued confidence in India’s growth trajectory. Investors continue to view India as one of Asia’s more structurally supported markets, benefiting from consumption-driven expansion and infrastructure investment.

Australia’s S&P/ASX 200 added 0.15% to 8,727.80, posting a measured gain as mining, energy, and banking stocks edged higher. Despite softness in the Australian Dollar Index, which fell 0.37%, equity sentiment remained stable, reflecting balanced expectations around commodity demand and domestic economic conditions.

Japan Lags as Equities Slip Despite Currency Support

Japan’s Nikkei 225 declined 0.37%, underperforming the region despite a weaker Japanese Yen Index, which fell 0.14%. While a softer yen typically supports exporters, the market lagged as investors remained cautious toward Japanese equities following strong year-end performance. Automakers and industrial stocks were mixed, and trading activity suggested consolidation rather than a reversal in the broader trend.

The subdued performance highlighted Japan’s more defensive start to the year, contrasting with the aggressive risk-on moves seen in Hong Kong and South Korea.

Outlook

Looking ahead, investors across Asia will closely monitor early signals from global central banks, particularly the U.S. Federal Reserve and the People’s Bank of China, for guidance on interest rates and liquidity conditions in 2026. Corporate earnings updates and forward guidance will also play a critical role in shaping market direction, especially for technology and export-driven economies. While Thursday’s strong start reflects renewed optimism, markets may remain sensitive to macro data and currency movements in the weeks ahead. Opportunities are likely to emerge in regions demonstrating policy clarity, earnings visibility, and resilient domestic demand as trading activity normalizes early in the new year.