(Dec 24): Asian stocks advanced on Wednesday, tracking gains on Wall Street, as data showing the US economy grew at its fastest pace in two years improved prospects for corporate earnings. The dollar weakened to hover around levels last seen in September.

MSCI’s regional equities gauge extended its gains into a fourth day, rising 0.2%, with technology stocks leading. That came after the S&P 500 Index closed at a record high, amid low volume ahead of the Christmas holiday.

Moves were more pronounced in commodities, with gold rallying to a record above US$4,500 (RM18,256.50) an ounce before paring gains. Gold’s haven appeal has been amplified recently by the US blockade of oil tankers linked to Venezuela. Platinum and silver both reached all-time highs, while copper topped US$12,000 a ton for the first time.

Risk appetite has remained firm heading into year end, with tech stocks in demand even as strong US growth data scaled back bets on near-term Federal Reserve (Fed) easing. After earlier concerns over high valuations and the billions pouring into artificial intelligence, traders are regaining confidence that companies will deliver solid earnings growth in 2026.

“If consumers remain resilient through the holiday and the fourth quarter, it should bode well for US gross domestic product (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.”

Inflation-adjusted US GDP expanded in the third quarter at a 4.3% annualised pace, higher than all but one estimate in a Bloomberg survey.

The economy maintained momentum through the middle of the year as consumers powered ahead and the most punitive of US President Donald Trump’s tariffs were rolled back. While the October-November US government shutdown is expected to weigh on fourth-quarter growth, economists expect a modest rebound in 2026.

Attention in Asia was also on the currencies market. The yuan extended its gains, edging closer to the key 7.0-per-dollar level, after the People’s Bank of China set a stronger fixing. The yen rose for a third day as traders remained on watch for signs of currency intervention following Tokyo’s warning against excessive moves. 

The South Korean won strengthened after authorities warned against excessive weakness in the currency. The increased rhetoric comes as the currency neared the psychologically important 1,500-per-dollar level — a threshold breached only during the global financial crisis and the Asian currency meltdown in 1997.

Also, India’s central bank announced fresh measures aimed at boosting banking liquidity with government bond purchases and foreign-exchange swaps aimed at supporting a weakening rupee, which has emerged as Asia’s worst-performing currency this year.

In other corners of the market, Treasuries edged up ahead of a seven-year note auction, while a Bloomberg gauge of the dollar extended its slide into a third day.

The dollar is heading for its worst annual performance in eight years, and the options market is signaling that traders are preparing for more downside in the final sessions of 2025 and beyond.

The session after Christmas has historically been the most consistently positive day of the year for stocks, according to Bespoke Investment Group. In the 39 years since 1953 when the market was open on Dec 26, the S&P 500 has only declined six times.

“We are set up for a Santa Claus rally,” Kieran Calder, the UBP head of equity research, said in a Bloomberg TV interview. “The market is taking some of the data pretty positively.”

Meanwhile, Trump said he expects his Fed chair to lower rates if the market is doing well, the latest signal that the president is eager for a nominee committed to borrowing cost cuts as he nears an announcement of his choice to replace Jerome Powell. Money markets see a less than 20% chance of a Fed reduction in January.

Elsewhere, Treasury Secretary Scott Bessent backed the idea of reconsidering the Fed’s 2% inflation target once the US has sustainably brought price increases back down to that pace.

“The economy is demonstrating a Goldilocks scenario with above-potential US economic growth, and declining but elevated inflation and a less robust labour market,” said Eric Teal at Comerica Wealth Management. “The Fed will likely maintain a dovish bias, which will only increase with a new Fed chair next year.”

Some of the main moves in markets: