Asian Markets Rally as Gold Hits Record

Global equity markets appear to be shaking off the year-end fatigue, with Asian shares climbing on Tuesday following a positive lead from Wall Street. As traders brace for a holiday-shortened week, the mood remains cautiously optimistic, though underlying tensions in the currency and commodity markets suggest that volatility has not entirely exited the building.

While US futures remained flat during Asian trading hours, the real story unfolded in the commodities sector. Gold prices surged to fresh historic highs, climbing 1.1 per cent early Tuesday to reach an eye-watering $4,519.50. Silver followed suit with a 1.5 per cent gain. This relentless ascent in precious metals highlights a persistent flight to safety among institutional investors, likely hedging against the "stubbornly high inflation" and geopolitical friction that have defined the trading landscape of 2025.

In Tokyo, the Nikkei 225 remained flat at 50,412.87, but the drama was centred on the foreign exchange markets. The US dollar weakened against the Japanese yen, trading at 156.01 yen, down from 157.04 yen late Monday. This movement was not purely organic; it followed stern warnings from officials in Tokyo who stated they would "intervene if the yen weakened sharply".

This verbal intervention serves as a stark reminder to currency speculators that the Bank of Japan is watching closely. Meanwhile, the euro strengthened slightly to $1.1782. Across the rest of the region, the picture was mixed but generally positive. South Korea’s Kospi added 0.3 per cent, and Australia’s S&P/ASX 200 jumped 1.1 per cent, while Hong Kong’s Hang Seng dipped slightly by 0.1 per cent.

Corporate developments continue to drive individual stock movements, particularly in the technology and media sectors. In a significant move for the gig economy, both Uber and Lyft saw their share prices rise by 2.5 per cent and 2.7 per cent respectively, following announcements of plans to introduce robotaxi services to London next year. This signals a continued push towards automation in transport, a key theme for investors monitoring AI integration.

The media landscape is witnessing an intense bidding war. Paramount Skydance shares rose 4.3 per cent after the company sweetened its hostile takeover bid for Warner Bros. Discovery. The deal now includes an "irrevocable personal guarantee" from Larry Ellison, the Oracle founder, who is putting up billions to back the deal against rival suitor Netflix. Consequently, Warner Bros. Discovery rose 3.5 per cent, while Netflix slipped 1.2 per cent.

Despite the festive cheer in equities, the macroeconomic backdrop remains complicated. The "ongoing and wide-ranging US trade war" continues to hang over businesses and consumers alike. Recent data indicates that the job market is slowing and retail sales have weakened, yet inflation remains sticky.

This dichotomy places the Federal Reserve in an "awkward policy position" moving forward. Although the central bank has cut its benchmark interest rate at its last three meetings, inflation sits stubbornly above the 2 per cent target. Wall Street consensus largely expects the Fed to hold rates steady at its January meeting, as policymakers await further data. Investors will be keeping a close watch on Tuesday’s GDP estimates and the Conference Board’s consumer confidence survey to gauge whether the soft landing is still on track or if the trade war pressures will finally crack consumer resilience.