Asian Stock Market Update

Most Asian stocks rose on Tuesday, buoyed by gains in technology stocks tracking their U.S. counterparts, although trading volumes were low ahead of the Christmas holiday.

Regional markets drew positive cues from Wall Street, which closed higher on Monday as tech stocks made up some losses from the previous week. U.S. stock index futures remained flat during Asian trading.

Both Wall Street and most Asian markets will experience shortened trading sessions on Tuesday.

Asian markets had faced recent losses after the Federal Reserve indicated a slower pace of interest rate cuts expected in 2025, negatively impacting risk-driven assets.

Japan Shares Muted; Honda Rallies, Nissan Flat Amid Merger Talks

Japan’s Nikkei 225 index and the TOPIX fell slightly on Tuesday.

Attention focused on automakers Honda Motor Co Ltd and Nissan Motor Co., Ltd., which confirmed they were in discussions about a potential merger to be completed in 2026.

Honda’s shares surged as much as 15% after announcing a ¥1.1 trillion ($7 billion) buyback.

Nissan's stock traded flat after recovering some earlier session losses, having sharply risen on Monday following the merger news.

Mitsubishi Motors, in which Nissan holds a 34% stake, saw its shares rise 3.6% in response to the merger talks. The Honda-Nissan merger would create the world’s third-largest automaker by sales. Analysts, however, believe the 2026 completion date is overly cautious amid ongoing declines in sales.

Chinese Stocks Upbeat on Stimulus Hopes

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes increased by approximately 0.7% each, while Hong Kong’s Hang Seng index gained 1%, fueled by tech stock rallies.

Investors were awaiting more information on potential stimulus measures from Beijing for the upcoming year. Reports indicated the country might increase fiscal spending to support economic growth.

Optimism regarding stimulus helped Chinese stocks withstand recent declines in Asian markets. Relevant purchasing managers index data for China is anticipated in the coming days, potentially providing further insights into Asia's largest economy.

Broader Asian stocks mainly ended higher in the holiday-shortened trading session. Australia’s ASX 200 saw a modest 0.1% increase as the Reserve Bank’s December meeting minutes hinted at an eventual decrease in interest rates.

Conversely, South Korea’s KOSPI fell 0.2%, with tech gains offset by concerns over ongoing political instability in the country. Singapore’s Straits Times Index rose by 0.5%, while Indian Nifty 50 futures suggested a weak opening due to steep losses in recent weeks.