Asian stocks end 2025 higher as AI rally powers markets

Asian stocks drifted on the final trading day of the year, capping a strong 2025 marked by a powerful rally in artificial intelligence chipmakers and broad gains across global markets despite trade tensions and geopolitical risks.

MSCI’s Asia Pacific index outside Japan slipped 0.17 per cent on Wednesday but is on track for a 27 per cent annual rise, its strongest performance since 2017, driven largely by semiconductor stocks. Japanese markets are closed for the rest of the week, and thin volumes are expected as most markets shut for New Year’s Day.

China’s blue-chip index edged higher and is set for an 18 per cent gain this year, while Hong Kong’s Hang Seng fell 0.7 per cent but remains on course for a 28 per cent rise as investors largely brushed aside trade war concerns. South Korea’s Kospi has been the world’s best-performing major market in 2025, surging 76 per cent, led by strong gains in SK Hynix and Samsung.

The Federal Reserve’s December meeting minutes highlighted deep divisions over the future path of US interest rates, reinforcing uncertainty over policy in 2026. Investors are weighing the Fed’s projection of one rate cut against market expectations for at least two. US 10-year Treasury yields stood at 4.1258 per cent, down 45 basis points for the year, with trading muted due to holidays.

In currency markets, the dollar steadied on Wednesday but is set to post a 9.4 per cent annual decline, its steepest since 2017, supporting strong yearly gains in the euro and sterling.

Attribution: Reuters