Asia, US Futures Extend AI-Led Market Rally

January 2, 2026 at 07:09 UTC

4 min read

AI and tech stocks drive Asia and US futures higher, market rally visualization, Fed cues focus

Key Points

Asian equities opened 2026 higher, led by tech and AI-related names
Hong Kong’s Hang Seng rose 2.2% as Baidu and Alibaba advanced
US stock futures gained after a double-digit 2025 for major indexes
Investors now focus on Fed policy signals and early‑January data

Asian markets start 2026 on a positive note

Asian equities opened the new year with gains on Friday, supported by strength in technology and artificial intelligence-related shares. Hong Kong’s Hang Seng Index climbed 2.2% to 26,189.79, helped by a strong rally in major tech stocks. Alibaba rose 3.2%, while Baidu jumped between almost 7% and 7.5% after the company said its artificial intelligence chip unit Kunlunxin had filed for a listing in Hong Kong, with plans to spin off the business and list shares in early 2027, subject to regulatory approvals. Elsewhere in the region, South Korea’s Kospi added between 1.5% and 1.7% to trade around 4,277.94, with Samsung Electronics up about 3% after co-CEO Jun Young Hyun said customers had praised its high-bandwidth memory chips, according to Bloomberg News. Australia’s S&P/ASX 200 edged 0.2% higher to 8,727.30, Taiwan’s Taiex gained 1.1%, and India’s Sensex added 0.1%. Markets in Tokyo, Shanghai, Thailand and New Zealand remained closed for holidays, keeping overall trading volumes thin.

AI enthusiasm underpins regional equity strength

Analysts cited expectations for continued growth in artificial intelligence as a key support for Asian markets. In 2025, Seoul’s stock market surged about 75% to 76%, with the Kospi’s performance attributed in large part to the AI boom. Hong Kong’s Hang Seng advanced 28% and Tokyo’s Nikkei 225 gained more than 26% over the year. The strong debut of Shanghai-based chip designer Biren Technologies reinforced investor appetite for AI-linked assets. Biren’s Hong Kong listing raised more than $700 million and the shares jumped about 80% on Friday, with China Everbright Securities strategist Kenny Ng saying the company "enjoys scarcity value and high market attention" and describing the industry as in a "flourishing stage" with significant growth potential. More broadly, Capital Economics’ Shivaan Tandon noted that exports from most Asian countries have surged in recent months and said the near-term outlook for the region’s export-oriented manufacturing sectors remains favorable, even as recent manufacturing data have been relatively weak.

US futures rise after strong but volatile 2025

US stock futures were higher on Friday, as investors looked to extend a three-year run of strong gains. Futures on the S&P 500 were up about 0.5%, while Dow Jones Industrial Average futures added roughly 0.3%. Trading follows a year in which the S&P 500 rose about 16.4% to 16.6%, the Nasdaq gained around 20.4%, and the Dow advanced roughly 13% to 13.2%, marking a third consecutive year of double-digit returns. Market performance in 2025 was largely driven by AI-led growth and three interest rate cuts by the Federal Reserve. Notable winners included Palantir Technologies, up about 136.4%, AppLovin, up 97.15%, Alphabet, up 65.23%, and Nvidia, up 34.84%. However, the final session of 2025 saw the S&P 500 fall 0.7% to 6,845.50, the Dow drop 0.6% to 48,063.29, and the Nasdaq decline 0.8% to 23,241.99, extending a four-day losing streak amid thin holiday trading and year-end rebalancing.

Fed outlook, data calendar and sector positioning

Investors are now turning their attention to monetary policy and upcoming economic releases that could shape early-2026 trading. Market participants are betting that the Federal Reserve will hold interest rates steady at its next policy meeting in late January, after cutting rates in December 2025. Recent Fed minutes and shifting expectations for further adjustments have contributed to modest pullbacks in major US indexes at the very start of 2026, with one report citing small declines of 0.14% for the S&P 500, 0.20% for the Dow and 0.24% for the Nasdaq on January 1. Traders are watching a busy data slate, including initial jobless claims, manufacturing and services purchasing managers’ indexes, JOLTS job openings, trade figures, and inflation indicators such as the Consumer Price Index and Producer Price Index later in January. In parallel, sector positioning remains in focus. Research from Limelight Alpha highlighted a shift toward healthcare in mid-2025, with healthcare subsequently outperforming technology and acting as a potential diversification area as investors head into 2026 after heavy allocations to tech and AI beneficiaries.

Key Takeaways

Early 2026 trading shows risk appetite remains intact, with Asian equities and US futures advancing after a strong AI-driven 2025.
AI-related companies, from Chinese chip designers to US tech leaders, continue to anchor market leadership and attract substantial capital.
Monetary policy and a dense January data calendar are now central to market direction, as investors gauge whether Fed actions will sustain the current rally.