(Sharecast News) - Asia-Pacific markets fell in holiday-shortened, year-end trade on Wednesday, with thin volumes and mixed economic signals shaping sentiment across the region.
Investors weighed firmer-than-expected Chinese manufacturing data against ongoing concerns over global growth and domestic inflation dynamics elsewhere, while several major markets were closed for public holidays.
As Stephen Innes, managing partner at SPI Asset Management, noted, "we are closing in on year-end with thin volumes and little fresh information to lean against," adding that when liquidity dries up, "price action becomes more about balance than discovery."
Most markets in the red on final day of 2025
In Japan, markets were shut for the Lmisoka holiday.
Chinese equities were mixed, with the Shanghai Composite edging up 0.09% to 3,968.84, supported by strength in selective industrial and consumer names.
Zhejiang Baida Precision Manufacturing, Topscore Fashion Shoes and Minmetals Development each surged about 10%, rising 10.04%, 10.04% and 10.03% respectively.
The Shenzhen Component lagged, falling 0.58% to 13,525.02.
Economic data showed China's factory activity expanded in December for the first time since March, with the official manufacturing purchasing managers index rising to 50.1 from 49.2 in November, beating a Reuters poll forecast of 49.2.
A reading above 50 indicates expansion.
Innes said such cross-currents are typical of late-year trade, with markets "looking for an angle of repose, a place to lean while waiting for January to bring fresh catalysts."
Hong Kong shares underperformed, with the Hang Seng Index sliding 0.87% to 25,630.54.
Losses were led by technology and healthcare names, including Innovent Biologics, which fell 3.66%, NetEase, down 3.25%, and Trip.com Group, which declined 2.98%.
Innes observed that beneath subdued index moves, "the posture shifted," with earlier risk-off dynamics easing slightly, even as breadth remained weak, a mix that "usually signals a market trading inventory, not building exposure."
South Korean markets were closed for the Seotdalgeumeum holiday, though fresh economic data remained in focus.
Consumer inflation slowed slightly to 2.3% year on year in December from 2.4% in November, in line with the median Bloomberg forecast, while core inflation held steady at 2%.
Both measures remained around the Bank of Korea's 2% target, reinforcing expectations that policymakers are unlikely to resume rate cuts when they meet on 15 January.
Persistent strength in the property market, with Seoul apartment prices rising for a 47th straight week as of 22 December, continued to raise concerns over financial imbalances, even as broader price pressures show signs of easing.
Innes said bond markets reflected a similar stasis globally, with "yields barely moved ... nothing that changes the macro picture."
Australian equities finished marginally lower, with the S&P/ASX 200 slipping 0.03% to 8,714.30.
Telix Pharmaceuticals dropped 3.61%, while Mesoblast and Deterra Royalties each fell 2.86%.
In New Zealand, the S&P/NZX 50 was flat, inching up 0.002% to 13,548.42, as gains in KMD Brands, up 3.64%, Investore Property, up 1.33%, and Westpac Banking Corporation, up 1.23%, offset broader weakness.
Innes said momentum remained absent across global markets, noting that "the fast horses are not being chased," a hallmark of late-cycle, year-end positioning.
Dollar makes gains on regional peers
In currency markets, the dollar strengthened modestly, rising 0.14% on the yen to last trade at JPY 156.63, as it added 0.17% against the Aussie to AUD 1.4961 and climbed 0.46% on the Kiwi to change hands at NZD 1.7343.
Innes said the dollar's resilience was again led by yen weakness, adding, "the dollar pushed higher again, led by yen weakness, while remaining inside its recent USD-JPY up channel," and arguing that fiscal concerns in Japan were increasingly shaping FX dynamics.
Oil prices edged higher in thin trade, with Brent crude futures last up 0.27% on ICE at $61.49 per barrel, and the NYMEX quote for West Texas Intermediate gaining 0.31% to $58.13, though Innes cautioned that in energy markets "barrels matter more than headlines" amid rising inventory concerns.
Reporting by Josh White for Sharecast.com.
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