Asian Stocks Up As Tech Shares Lead Pre-Holiday Rally

Asian stocks saw modest gains in thin pre-holiday trading on Tuesday, with a rally in tech stocks driving the market. Shares in Mainland China and Hong Kong were among the best performers, while Japanese stocks showed mixed results. Taiwan Semiconductor Manufacturing Co. (TSMC) reached a new record high, while Honda Motor Co. surged following its announcement of a ¥1.1 trillion ($7 billion) share buyback program. Meanwhile, European stock futures declined, and U.S. futures showed little change.

“The rally in 2024 has been very concentrated in technology, and this trend is expected to continue into 2025,” said Ecaterina Bigos, Chief Investment Officer for Asia ex-Japan at Axa Investment Managers Asia Ltd., speaking to Bloomberg Television. “In 2025, we expect to see a broadening of earnings and a rally that is less concentrated in a few sectors.”

Despite the gains in certain markets, the MSCI Asia equity index is set for its first quarterly loss since September 2023, having fallen 6.8% this quarter. In contrast, the S&P 500 has gained 3.7%. Sentiment in Asia has been dampened by concerns over global trade tariffs under U.S. President-elect Donald Trump, a stronger U.S. dollar, and China’s sluggish economic recovery.

Nissan Motor Co.’s shares fell as much as 7.3% in Tokyo after the company confirmed ongoing talks with Honda about a potential business integration. Conversely, Honda’s stock rose by as much as 14% following its share buyback announcement.

TSMC’s stock increased by 1.4% in Taipei, briefly surpassing its previous high from November 8, fueled by gains in U.S. chip stocks, particularly Nvidia Corp. The semiconductor giant’s shares have surged more than 80% this year.

Tuesday’s trading session was generally quiet due to early market closures for the Christmas holiday in Australia, Hong Kong, and Singapore. Most Asian markets will be closed on Wednesday, with the exceptions of Mainland China and Japan.

In the currency market, U.S. Treasuries remained largely unchanged, while Bloomberg’s gauge of the dollar edged higher. The Japanese yen fluctuated amid light trading, with Japan’s Finance Minister Katsunobu Kato warning about excessive currency movements.

Japan’s currency faces continued risks, especially with Bank of Japan Governor Kazuo Ueda scheduled to speak on Wednesday and the central bank releasing further details of its policy meeting on Friday. Market analysts expect Ueda’s tone to remain dovish, though there is a risk that he could adopt a more hawkish stance to stabilize the yen, which could catch markets off guard given the thin trading volumes.

In China, the government is planning to sell 3 trillion yuan ($411 billion) in special treasury bonds in 2025, up from the 1 trillion yuan issued this year, according to sources cited by Reuters.

Meanwhile, South Korea’s consumer confidence took a sharp hit in December, declining by the largest margin since the COVID-19 outbreak. The drop was attributed to the political turmoil surrounding President Yoon Suk Yeol’s declaration of martial law and subsequent impeachment. As a result, South Korea’s Kospi index fell, becoming one of the worst-performing major benchmarks in Asia this year.

On Wall Street, the S&P 500 rose 0.7% and the Nasdaq 100 climbed 1%. A gauge of U.S.-listed Chinese shares gained 0.9%. The S&P 500 continues to show strong performance, rising by about 25% since the end of 2023, with the top seven technology stocks accounting for more than half of the gains.

Oil prices saw an uptick in thin trading ahead of the holidays after a three-day selloff, influenced by the strengthening U.S. dollar and geopolitical uncertainty surrounding President-elect Donald Trump’s foreign policies. Gold prices also edged higher.