BY COMFORT OGBONNA
Asian stock markets were mostly lower in thin holiday trading as investors weighed fresh geopolitical tensions after China carried out military exercises near Taiwan, while movements in commodities and currencies reflected shifting expectations around global growth and monetary policy.
Market activity across the region remained subdued as many investors stayed on the sidelines during the year-end holiday period. Sentiment was dampened by news that China had staged military drills around Taiwan, the self-governed island that Beijing considers part of its territory. Despite the heightened rhetoric, shares in Taiwan moved higher, suggesting that local investors were taking a measured view of the developments.
China’s military said the exercises were meant to send a warning against what it described as separatist forces and “external interference.” In response, Taiwan placed its armed forces on alert and accused Beijing of being the “biggest destroyer of peace” in the region. The drills followed Beijing’s anger over recent U.S. arms sales to Taiwan and comments by Japanese Prime Minister Sanae Takaichi, who said Japan’s defense forces could become involved if China were to take military action against the island. Chinese officials did not directly mention the United States or Japan in their statement.
Taiwan’s benchmark Taiex index gained 0.9%, showing resilience despite the tense backdrop. In contrast, Hong Kong’s Hang Seng index reversed early gains and fell 0.7% to 25,637.69, as investors locked in profits and remained cautious about regional risks. Mainland China’s Shanghai Composite index was virtually flat, ending at 3,965.28, reflecting a wait-and-see approach among domestic investors.
Japan’s Nikkei 225 slipped 0.4% to 50,526.92, pressured by light trading volumes and a stronger yen earlier in the session. Australian stocks also declined, with the S&P/ASX 200 falling 0.4% to 8,725.70, as gains in mining and energy shares were offset by weakness in financials.
South Korea stood out as a bright spot in the region. The Kospi surged 2.2% to 4,220.56, putting it within two points of its all-time high reached in early November. A sharp 6.8% jump in SK Hynix helped lift the index after a regulatory change removed an investment warning on the stock. Samsung Electronics also contributed to the rally, rising 2.1% amid continued optimism around the global semiconductor cycle and artificial intelligence demand.
In commodities markets, gold and silver prices retreated after recent strong gains. Gold fell 1.3% to $4,494 per troy ounce, while silver slid 2.4% to $75.30. Both metals have climbed to record or near-record levels in recent weeks, supported by supply constraints and strong demand from investors seeking safe-haven assets outside traditional stocks and bonds.
Earlier gains in gold were also fueled by concerns during the recent U.S. government shutdown and expectations that the U.S. Federal Reserve may cut interest rates further in the coming year. Lower interest rates typically weaken the dollar, making gold more attractive to investors using other currencies.
Silver prices have been influenced by additional factors beyond safe-haven demand. China, which refines roughly two-thirds of the world’s silver supply, has scrapped its export quota system and replaced it with an export licensing system set to take effect on Jan. 1. The move has raised concerns about tighter global supplies and potential disruptions for industrial users.
“Scarcity is no longer theoretical,” said Stephen Innes of SPI Asset Management. “China sits at the center of global silver refining, and when the world’s top refiner starts tightening the valve, downstream users feel it immediately.”
U.S. markets showed little movement when trading resumed Friday after the Christmas holiday. The S&P 500 slipped less than 0.1%, the Dow Jones Industrial Average also edged down by less than 0.1%, and the Nasdaq composite fell 0.1%. With only three trading days left in 2025, the S&P 500 is up nearly 18% for the year, buoyed by deregulatory policies from the Trump administration and strong investor enthusiasm for artificial intelligence and technology-related stocks.
Trading volumes have remained light, as many institutional investors have largely closed their books for the year, limiting sharp moves in either direction.
Oil prices edged higher in early Monday trading, recovering some of the losses seen late last week. U.S. benchmark crude oil rose 68 cents to $57.42 per barrel, while Brent crude gained 66 cents to $60.90 per barrel. On Friday, U.S. crude had fallen 2.8% and Brent had dropped 2.6%, pressured by concerns about global demand and rising inventories.
In currency markets, the U.S. dollar weakened slightly against the Japanese yen, falling to 156.23 yen from 156.56 yen. The euro edged higher to $1.1777 from $1.1770, as traders positioned themselves ahead of the new year and potential shifts in central bank policies.
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