The market rally came despite weaker domestic economic data. South Korea’s gross domestic product contracted 0.3% in the October–December quarter from the previous three-month period, its steepest quarterly decline since 2022. On an annual basis, GDP grew 1.5%, and full-year growth slowed to 1%, the lowest rate since 2020, when the economy shrank amid the COVID-19 pandemic.
Japanese Benchmarks Break Losing Streak
In Tokyo, the Nikkei 225 gained 1.73% to 53,688.89, snapping a five-day slide, while the broader Topix climbed 0.74% to 3,616.38. Investor sentiment improved even as Japan’s Ministry of Finance reported that exports rose 5.1% year on year in December, undershooting the 7.0% increase expected by analysts polled by Reuters. Import values slipped on lower energy prices, contributing to a narrower trade deficit.
Automakers and semiconductor suppliers led advances, reflecting optimism that an easing of trade tensions between Washington and European capitals could bolster global supply chains. Shares of Toyota Motor, Honda Motor and chip-equipment maker Tokyo Electron all closed higher.
Modest Moves in Mainland China and Hong Kong
Chinese equities delivered smaller gains compared with peers in Seoul and Tokyo. The CSI 300, which tracks the largest stocks listed in Shanghai and Shenzhen, inched up 0.01% to 4,723.71. In Hong Kong, the Hang Seng Index was marginally higher in late trading as investors weighed recent policy support measures from Beijing against lingering property-sector pressures. Energy producers and consumer discretionary names were mixed, while banking shares were largely flat.
Market participants said the limited response in mainland exchanges reflected caution ahead of the upcoming Lunar New Year holiday as well as uncertainties about the pace of China’s economic recovery. Recent data showed industrial output and retail sales improving but still below pre-pandemic trends.
Australia Rebounds After Previous Session’s Decline
Australia’s S&P/ASX 200 advanced 0.75% to close at 8,848.7, recovering some of the ground lost in Tuesday’s trading. Mining companies benefited from higher iron-ore prices, and financial stocks found support in the region-wide risk-on mood. Nonetheless, analysts noted that sentiment remains sensitive to global trade news and commodity demand projections.
Wall Street Rally Provides Additional Tailwind
Overnight gains on Wall Street provided a strong lead for Asia. The Dow Jones Industrial Average climbed 1.21%, the S&P 500 added 1.16%, and the Nasdaq Composite advanced 1.18%. Technology and industrial stocks accounted for the bulk of the U.S. rally as investors reacted to Trump’s comments and a stable interest-rate outlook from the Federal Reserve. Futures markets pointed to a steady open in New York later Wednesday, suggesting continued appetite for risk assets.
Trade Outlook and Currency Movements
Currency markets were relatively calm. The U.S. dollar index was little changed, while the Japanese yen weakened modestly, helping Japan’s exporter shares. The South Korean won and Australian dollar firmed against the greenback, mirroring improved confidence in regional growth prospects.
Market strategists said Trump’s decision to step back from immediate tariff action reduced short-term geopolitical uncertainty but cautioned that negotiations over Greenland could still introduce volatility. Greenland is an autonomous territory within the Kingdom of Denmark, and Danish officials have reiterated that the island is not for sale. Trump’s earlier comments about purchasing the territory had strained relations with European allies.
Economic Indicators in Focus
Investors in Asia will continue to monitor upcoming data releases. South Korea is set to publish consumer-confidence readings later this week, and China will release official purchasing managers’ indexes covering manufacturing and services at month-end. Japan’s central bank will meet next week, amid speculation about potential tweaks to its yield-curve-control policy.
Analysts also highlighted that fourth-quarter corporate earnings across the region could influence market direction. Technology firms, particularly semiconductor producers, are expected to report results that reflect both resilient demand and ongoing supply-chain adjustments.
Outlook
While the immediate relief rally underscores how sensitive global markets remain to trade developments, participants noted that the fundamental picture—slowing growth in South Korea, muted expansion in Japan and an uneven recovery in China—continues to warrant vigilance. Nevertheless, with geopolitical tensions over Greenland momentarily reduced and no new tariff measures on the horizon, risk appetite improved across Asia, offering a reprieve from recent selling pressure.
Crédito da imagem: Sean Gallup | Getty Images
