Asian Markets Diverge as Taiwan Tensions Rise and Precious Metals Attract Safe-Haven Flows

Key Moments

Asia-Pacific Equities Trade Mixed Amid Geopolitical Strains

Asian equity markets were uneven on Monday during subdued holiday trading, as investors weighed a muted post-Christmas performance on Wall Street against escalating geopolitical risk around Taiwan.

U.S. stock index futures were reported to be largely flat.

China’s military announced that it had deployed air, naval, and rocket units for joint exercises encircling Taiwan, which Beijing regards as part of its territory. The drills were described as a warning to what Beijing called separatist and “external interference” forces. In response, Taiwan said it had put its own forces on alert and labeled China’s government “the biggest destroyer of peace.”

The maneuvers followed Beijing’s displeasure over U.S. arms sales to Taiwan and a statement by Japan’s prime minister, Sanae Takaichi, indicating that Japan’s military could be drawn in if China were to act against the self-governed island. However, the Chinese military statement issued Monday morning did not explicitly refer to the United States or Japan.

Regional Market Performance

Equity markets across the region showed mixed reactions in the wake of the developments around Taiwan.

Trading volumes were described as light, with many institutional investors effectively finished for the year.

Precious Metals: Safe-Haven Demand Supports Silver, Gold Slips

Precious metals remained in focus as investors continued to seek diversification away from traditional risk assets.

The spot price of gold declined 0.4% to $4,535.50 per troy ounce. Silver, by contrast, gained 3% to $79.87 and was noted as having reached record levels, supported by supply constraints.

Earlier gains in gold were partly associated with concerns around the U.S. government shutdown. Expectations that the U.S. Federal Reserve will implement further interest rate cuts in the coming year, which could weaken the dollar against other major currencies, have also underpinned demand for gold.

Both gold and silver have advanced over the course of the year as investors searched for safe havens outside of equities and fixed income. Mining shares benefited at the end of the prior week, with Freeport-McMoRan rising 2.2% on Friday.

Wall Street Pauses After Strong Year-to-Date Gains

U.S. equities eased slightly when markets reopened on Friday following the Christmas holiday, even as the broader market remained sharply higher for the year.

With three trading sessions remaining in 2025, the S&P 500 was reported to be up nearly 18% year to date, supported by the deregulatory agenda of the Trump administration and investor enthusiasm around the outlook for artificial intelligence.

Oil and Currency Markets

In early Monday dealings, crude benchmarks edged higher following losses at the end of last week.

In foreign exchange trading, the U.S. dollar weakened to 156.28 Japanese yen from 156.56 yen. The euro was unchanged at $1.1770.

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