Asian stock markets concluded the year on a strong note, surging to a six-week high this Friday, December 26th, as investors embraced a wave of positive sentiment. Simultaneously, the rally in precious metals intensified dramatically, with both gold and silver achieving record highs, buoyed by a notable weakening of the US dollar.
Despite relatively thin market liquidity, primarily due to the closure of exchanges in Australia, Hong Kong, and most of Europe, investor risk appetite showed significant improvement as the year drew to a close.
As reported by Reuters, Japan’s Topix index reached an unprecedented record high, climbing 0.5 percent. In South Korea, the benchmark KOSPI index advanced 0.6 percent, propelling its annual performance to a staggering 72 percent surge, solidifying its position as the best-performing major stock market globally this year.
Meanwhile, China’s blue-chip CSI300 index also saw a positive movement, rising 0.27 percent. This put the index on track for an impressive 18 percent annual gain, marking its strongest yearly jump since 2020.
This robust positive performance across the region consequently lifted the MSCI Asia Pacific ex-Japan index to its highest level since November 14th. The index itself posted a 0.4 percent gain, contributing to an approximate 25 percent increase throughout the year.
Beyond the equity markets, investor attention firmly gravitated towards the precious metals sector. Spot silver prices soared by over 4 percent, setting a new record high. Gold also achieved an all-time high, with its last recorded trade at an astounding USD 4,503.39 per ounce.
Soojin Kim, a commodity analyst at MUFG, attributed this potent precious metals rally to a confluence of factors: significant bulk purchases by central banks, robust inflows into gold-backed Exchange Traded Funds (ETFs), and growing investor apprehension regarding currency depreciation coupled with escalating global debt.
In her detailed notes, Kim further elaborated, “With several major banks projecting continued gains well into 2026, sustained strong physical demand, and persistent geopolitical and monetary policy uncertainties, the precious metals rally is indeed poised for further potential extension.”
Year-to-date, the price of gold has seen a monumental surge of over 71 percent, marking its highest annual increase since 1979. Silver prices, not to be outdone, skyrocketed by an astonishing 158 percent over the same period.
As the new year approaches, investor focus is intently shifting towards the trajectory of United States interest rate policy. Market participants largely anticipate that the Federal Reserve will implement at least two rate cuts in 2026, though such a move is not expected to materialize before June.
The downward pressure on the US dollar persisted. The dollar index, which gauges the greenback’s strength against a basket of six major global currencies, tumbled 0.8 percent, reaching its weakest point since July. During Asian trading hours, the dollar index found some stability, settling at 97.935.
In the dynamic currency markets, the Japanese yen experienced a slight weakening to 156.23 per US dollar. Despite this minor setback, it still registered a significant weekly gain of approximately 1 percent, its largest since late September. This appreciation was ignited by verbal warnings from Japanese authorities, which reignited speculation of potential intervention in the foreign exchange market, even after the Bank of Japan’s recent interest rate hike last week.
Summary
Asian stock markets concluded the year on a strong note, reaching a six-week high on December 26th amidst positive investor sentiment. Japan’s Topix index hit an unprecedented record, and South Korea’s KOSPI surged 72% annually, becoming the best-performing major market. China’s CSI300 also saw an impressive 18% annual gain, collectively lifting the MSCI Asia Pacific ex-Japan index to its highest level since mid-November.
Concurrently, precious metals experienced a dramatic rally, with both gold and silver achieving record highs; gold traded at USD 4,503.39 per ounce. This surge was driven by central bank purchases, ETF inflows, and a notable weakening of the US dollar, which fell to its lowest point since July. Gold posted a monumental 71% annual increase, while silver skyrocketed by an astonishing 158% year-to-date.