Moves across asset classes were muted with momentum in early trade carrying over from a year-end rally while liquidity remained low due to the holidays. Markets in Japan and China were closed in Asia while others returned from the New Year festivities.
Precious metals extended their stellar run from last year, with spot gold up 0.9% to US$4,351.70 an ounce, while spot silver jumped 2% to US$72.63 per ounce.
Gold’s 2025 rise was its biggest in 46 years, while silver and platinum made their largest gains on record, driven by a cocktail of factors including the Fed’s rate cuts, geopolitical flashpoints, robust central bank buying, and ETF inflows.
Vishnu Varathan, Mizuho’s head of macro research for Asia ex-Japan, said the rally also underscores “hedges against entrenching USD debasement risks”.
Elsewhere, MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.66% and Hong Kong’s Hang Seng Index gained 1.24%.
S&P 500 futures rose 0.29%, while Nasdaq futures added 0.36%.
European futures were mixed, with EUROSTOXX 50 futures down 0.5% and FTSE futures rising 0.1%.
Stocks made strong gains in 2025 as markets weathered a year of tariff wars, the longest government shutdown in US history, geopolitical strife as well as threats to central bank independence.
“The 2025 US equity market rally has been fuelled by AI euphoria, robust corporate earnings, share buybacks and strong retail flows,” said Saira Malik, chief investment officer at Nuveen.
“Bouts of volatility, such as those sparked by macro, geopolitical and policy uncertainty, as well as periodic shifts in sentiment around AI, are likely to remain a feature of equity markets, meaning investors should expect more hiccups in the coming year.”
Eyes on the Fed
Much of investors’ attention this year will also be on the strength of the US economy and the Fed’s policy path.
A slew of economic data delayed by the US government shutdown is due in the coming days and could be key in determining how far rate cuts can go.
Traders are pricing in just a 15% chance that the US central bank would ease rates this month, though see one more cut by June.
The greenback made a feeble start to the year, with the euro up 0.1% at US$1.1759, while sterling gained 0.16% to US$1.3481.
The yen was a touch stronger at 156.64 per dollar, but still not far from levels that kept investors skittish about possible intervention from Japanese authorities to shore up the ailing currency.
With further easing expected by the Fed this year even as some of its peers look set to hike, that has in turn dragged on the dollar, which in 2025 clocked its biggest annual drop in eight years.
The greenback has also been roiled by Trump’s chaotic trade policies and worries about Fed independence – an issue set to come to the fore this year as the US President prepares to announce Chair Jerome Powell’s replacement later this month.
“Although the administration will likely nominate more dovish voting members to join the Federal Open Market Committee… we expect the debate about the calibre of the candidates to centre on their market knowledge and credentials,” said Debbie Cunningham, chief investment officer of global liquidity markets at Federated Hermes.
“The names floated to succeed Powell seem to fit its desire to influence the Fed, but I’m hopeful the Senate confirmation process will focus on their expertise in monetary policy and that this will maintain the integrity of the institution.”
In commodities, oil prices edged up on Friday after posting their biggest annual loss since 2020 last year.
Brent crude futures were up 0.25% to US$61.00 per barrel, while US crude rose 0.26% to US$57.57 a barrel.