Asian stocks opened higher following Wall Street's record rally after data showed the US economy grew at its fastest pace in two years. The positive momentum extended across regional markets despite shortened holiday trading sessions.

Market Performance Overview

MSCI's regional stocks gauge extended gains into a fourth day, rising 0.20% as benchmarks in Japan and South Korea advanced. The rally came after the S&P 500 rose for a fourth consecutive day, with technology stocks climbing almost 1.00% amid low volume ahead of the Christmas holiday.

Commodities Surge to Record Highs

Attention focused on the commodities market with gold rallying to a new record above $4,500.00 per ounce. Gold's haven appeal has been amplified by Washington's blockade of oil tankers linked to Venezuela, creating geopolitical tensions that supported precious metals demand.

US Economic Strength Drives Sentiment

US inflation-adjusted gross domestic product increased at a 4.30% annualized pace, higher than all but one estimate in a Bloomberg survey and following 3.80% growth in the prior period. The strong economic data scaled back bets on near-term Federal Reserve easing, with Treasury two-year yields remaining above 3.50%.

"If consumers remain resilient through the holiday and the fourth quarter, it should bode well for US GDP and corporate earnings," said Bret Kenwell at eToro. "Earnings have continued to surprise to the upside. Bulls are hoping to see this trend continue in 2026."

Currency and Policy Developments

In South Korea, the won jumped after authorities warned against excessive weakness in the currency, saying they had held meetings over the last one-to-two weeks to discuss the won's recent decline. Meanwhile, India's central bank announced fresh measures aimed at boosting banking liquidity with government bond purchases and foreign-exchange swaps to support the weakening rupee.

Money markets see less than 20% chance of a Fed reduction in January, while Treasury Secretary Scott Bessent backed reconsidering the Fed's 2.00% inflation target once the US sustainably brings price increases back to that pace.

Asia-Pacific stock markets opened with broad-based gains, continuing the positive momentum from Wall Street where major indices advanced following the release of softer US Consumer Price Index (CPI) data. The encouraging inflation data from the United States has provided a supportive backdrop for regional markets, with investors displaying renewed optimism across key Asia-Pacific exchanges.

Regional Market Performance

The morning trading session showcased strong performance across major Asia-Pacific indices, with all three key markets posting notable gains.

The Australian ASX 200 gained 0.60% in early trading, while both the Japanese Nikkei 225 and South Korean KOSPI demonstrated stronger momentum with identical gains of 0.80%. This synchronized upward movement across the region reflects the positive sentiment spillover from US markets.

Market Drivers and Focus

US Inflation Data Impact

The regional gains can be attributed to the positive handover from Wall Street, where most major indices recorded advances following the release of softer CPI data. The encouraging US inflation figures have boosted investor confidence and provided a favorable environment for risk assets across Asia-Pacific markets.

Bank of Japan Outlook

Market participants are now directing their attention toward the Bank of Japan (BoJ), with expectations building around potential policy announcements or decisions that could influence regional market dynamics. The central bank's actions and communications are being closely monitored by investors as they assess the broader monetary policy landscape in the region.

The current market environment demonstrates the interconnected nature of global financial markets, with positive developments in US inflation data translating into broad-based gains across Asia-Pacific trading sessions.