Asia report: Markets mixed as traders watch US tensions
By Josh White
Date: Monday 26 Jan 2026
(Sharecast News) - Asia-Pacific markets traded mixed on Monday as investors remained cautious amid geopolitical tensions and sharp currency moves, with losses in Japan and South Korea offset by modest gains in Hong Kong and New Zealand.#
Risk sentiment was further shaped by a surge in safe-haven demand, with spot gold climbing to a record above $5,000 an ounce as the US dollar weakened, pushing the dollar index down 0.52% to 90.087.
As Patrick Munnelly, market strategy partner at TickMill, noted, "president Trump's withdrawn tariff threats shook global markets, causing the dollar to post its worst weekly performance since May," while commodity prices including gold continued to benefit from heightened geopolitical uncertainty.
Geopolitical concerns were in focus after Canadian prime minister Mark Carney said Ottawa had no intention of pursuing a free trade agreement with China, following a warning from US president Donald Trump that Washington would impose 100% tariffs on Canada if such a deal were signed.
Carney said Canada remained bound by its commitments under the Canada-United States-Mexico Agreement and would not seek trade pacts with non-market economies.
The backdrop of shifting trade rhetoric added to volatility across global assets, with Munnelly highlighting that "the dollar tumbled to its lowest point since May, amid uncertainty surrounding US policies, ongoing tariff disputes with Europe, and heightened scrutiny of the Federal Reserve's independence."
Markets mixed with geopolitical tensions in focus
Japanese equities led regional declines, with the Nikkei 225 sliding 1.79% to 52,885.25 and the Topix falling 2.13% to 3,552.49.
Fujitsu dropped 7.83%, Renesas Electronics fell 6.31% and Sumco lost 6.09%.
Investors continued to monitor Japan closely after the prime minister signalled readiness to counter speculative activity following a sharp yen strengthening on Friday, warning that authorities would act if volatility intensified.#
Munnelly said the turbulence in currency markets "coincided with remarks from Japan's top currency official, Atsushi Mimura, who emphasised Tokyo's commitment to working closely with Washington," adding that "market participants interpreted recent moves by the New York Federal Reserve as a sign that the US central bank might support Japanese authorities in direct currency market intervention to stabilise the yen."
In currency markets, the dollar fell 1.21% against the yen to JPY 153.81.
Mainland Chinese markets were slightly weaker, with the Shanghai Composite down 0.09% at 4,132.60 and the Shenzhen Component lower by 0.85% to 14,316.64.
Shanghai Carthane tumbled 10.02%, Shaanxi Aerospace Power Hi-Tech fell 10.01% and Xiamen King Long Motor Group declined 10.01%.
Hong Kong shares edged higher, with the Hang Seng Index up 0.06% at 26,765.52, supported by gains in energy and mining stocks.
China Shenhua Energy rose 4.42%, Zijin Mining Group gained 4.35% and CNOOC advanced 4.01%.
South Korean stocks were under pressure, with the Kospi 100 dropping 1% to 5,516.65.
Doosan slid 5.92%, Orion Corporation fell 5.58% and Hanjinkal lost 4.69%.
The weakness came despite gains in Asian currencies, with Munnelly noting that "Asian currencies capitalised on the dollar's weakness, with Malaysia's ringgit climbing to its strongest value since 2018 and South Korea's won touching its highest point in roughly three weeks."
In the Pacific region, Australian markets were closed for the Australia Day holiday, while New Zealand's S&P/NZX 50 added 0.09% to 13,460.74.
Pacific Edge climbed 3.89%, SkyCity Entertainment Group rose 2.11% and Ebos Group gained 1.36%.
Greenback in the red as oil prices rise
The dollar slipped 0.32% against the Kiwi to trade at NZD 1.6758, and eased 0.3% versus the Aussie to change hands at AUD 1.4461, reflecting what Munnelly described as a broader loss of confidence in the greenback as "concerns grew over potential American intervention in Japan's foreign exchange market, dampening sentiment toward the global reserve currency."
Oil prices were modestly higher, with Brent crude futures last up 0.3% on ICE at $66.08 per barrel, and the NYMEX quote for West Texas Intermediate rising 0.23% to $61.21.
Commodities remained supported by geopolitical tensions and currency moves, with Munnelly noting that "commodity prices, including oil, gold, and silver, rose amid geopolitical tensions," contributing to a cautious but volatile start to the week.
Reporting by Josh White for Sharecast.com.
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