Asia report: Defence plays lead gains across the region
By Josh White
Date: Tuesday 06 Jan 2026
(Sharecast News) - Asia-Pacific markets traded mixed on Tuesday, with gains across most major indices supported by a continued rally in defence stocks as investors weighed lingering geopolitical risks following the US attack on Venezuela and the capture of leader Nicolas Maduro.
Defence names extended gains for a second session, with Japan's Kawasaki Heavy Industries rising almost 6% and IHI adding 3.66%.
In South Korea, Korea Aerospace surged as much as 11% before paring gains to trade more than 9% higher, while Poongsan jumped over 8% and Hanwha Aerospace edged up 0.99%.
Patrick Munnelly, market strategy partner at TickMill, said that "despite ongoing geopolitical tensions, including the situation in Venezuela, investors continue to pour money into stocks, extending a three-year bull market fuelled by enthusiasm for technology and artificial intelligence (AI)."
Equities rise across Asia
Japanese equities led regional advances, with the Nikkei 225 climbing 1.32% to 52,518.08, supported by sharp gains in Hitachi, up 7.44%, Mitsubishi Materials, which rose 7.29%, and DOWA Holdings, up 6.41%.
The broader Topix index gained 1.75% to 3,538.44.
Munnelly noted that "Asian markets hit new heights, driven by a strong rally in Chinese tech stocks, as investors turn their attention to the region's more attractive valuations," adding that markets have "rebounded strongly from their April lows, buoyed by optimism about AI-driven growth and supportive measures like Federal Reserve rate cuts."
Mainland Chinese markets also moved higher, with the Shanghai Composite rising 1.5% to 4,083.67, driven by strong performances from Shanxi LuAn Chemical Technology, which surged 10.14%, Guangxi Radio and Television Information Network, up 10.11%, and Xinjiang Tianye, which gained 10.06%.
The Shenzhen Component added 1.4% to close at 14,022.55.
According to Munnelly, "Shanghai's stock market was on track to close at its loftiest level since 2015," while "the MSCI Asia Pacific Index advanced 1.1%," underlining the strength of the regional rebound.
Hong Kong stocks advanced, with the Hang Seng Index up 1.38% at 26,710.45.
China Hongqiao Group climbed 6.14%, JD Health International gained 5.41%, and Ping An Insurance rose 4.96%, contributing to broad-based gains across the market.
Munnelly highlighted that "an index tracking Hong Kong-listed Chinese tech companies surged to its highest point since November," and added that "even with the recent surge, Asian stocks remain considerably more affordable than their US tech counterparts," noting that the MSCI Asia Pacific Index trades on a price-to-earnings ratio of 15, compared with 22 for the S&P 500 and 25 for the Nasdaq 100.
South Korean equities strengthened, with the Kospi rising 1.52% to 4,525.48.
Smaller-cap names led gains, with Inscobee surging 29.96%, Kumho Electric jumping 29.93%, and D I Corp advancing 18.44%.
Down under markets mixed
Australian markets bucked the regional trend, with the S&P/ASX 200 falling 0.52% to 8,682.80.
Losses were led by Lovisa Holdings, down 4.58%, Virgin Australia, which slipped 4.03%, and Super Retail Group, lower by 3.67%.
In New Zealand, the S&P/NZX 50 rose 0.56% to 13,663.58, supported by gains in Infratil, up 2.62%, Property for Industry, which added 2.5%, and Auckland International Airport, up 1.8%.
Dollar relatively steady as oil prices rise
Currency markets were largely steady, with the US dollar up 0.07% against the yen at 156.49, marginally lower against the Australian dollar at 1.4893, and 0.01% higher versus the New Zealand dollar at 1.7276.
Oil prices edged higher, with Brent crude up 0.47% at $62.05 a barrel and West Texas Intermediate rising 0.39% to $58.55, as markets continued to monitor developments in Venezuela.
Munnelly said that oil prices, which "recently experienced their biggest jump in a week, have since steadied," while "precious metals rebounded after an earlier dip," with gold edging up 0.3% above $4,460 an ounce and silver surging 3.1% following reports surrounding Maduro's capture.
Reporting by Josh White for Sharecast.com.
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