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Asian stock markets moved in very tight ranges on Monday, as low year end volumes and limited participation kept investors cautious. Even so, expectations of easier United States monetary policy in 2026 continued to support overall sentiment and helped prevent any sharp declines.
Wall Street indices finished slightly lower on Friday, but general mood remained positive thanks to hopes of a Santa Claus style rally. United States stock index futures were almost flat during Asian trading hours on Monday, which kept regional investors in wait and see mode.
South Korea was the clear outperformer in Asia. The KOSPI index jumped about 1.7 percent, driven by strong gains in major technology stocks. SK Hynix rose nearly 6 percent after being removed from an investment warning list, while Samsung shares gained around 1.5 percent, providing additional support to the index.
Other markets were more subdued. In Japan, the Nikkei 225 slipped 0.3 percent while the broader TOPIX inched up 0.1 percent. In China, the Shanghai Composite added about 0.3 percent, Hong Kong’s Hang Seng rose roughly 0.4 percent, and Singapore’s Straits Times Index was almost unchanged. India’s Nifty 50 moved very little, and Australia’s S&P ASX 200 fell about 0.3 percent.
Expectations that the Federal Reserve will deliver more interest rate cuts in 2026 after its latest policy reduction are giving underlying support to Asian equities. Lower expected borrowing costs improve the outlook for global risk assets and support equity valuations, especially in emerging markets and sectors that are sensitive to interest rates.
With most year end positioning already completed, investors are now shifting their focus to how global growth trends, the pace of United States interest rate cuts, and local policy decisions in Asia will shape market performance as the region moves into 2026.
