Global markets headed into the final trading day of the year on a cautious note, with Dow futures slipping amid thin holiday liquidity, subdued volumes, and lingering unease after the Federal Reserve’s December minutes signaled caution on further rate cuts due to inflation risks, dampening hopes for a traditional Santa Claus rally. While Wall Street sentiment softened after a late-December pullback, individual stocks like Nike drew attention after its CEO bought shares, offering a rare bright spot. In contrast, Asian markets closed 2025 on a strong footing, led by Hong Kong and mainland China, where equities posted their best annual gains in years, fueled by an artificial intelligence boom, improving trade sentiment following a U.S.-China truce, and government-backed tech self-sufficiency efforts that lifted major Chinese tech stocks and revived Hong Kong’s IPO market. Meanwhile, the global AI theme extended into the semiconductor space, as reports indicated Nvidia is ramping up production of its H200 AI chips through TSMC to meet surging Chinese demand, underscoring both the strength of AI-driven investment momentum and ongoing concerns around supply constraints, geopolitics, and regulatory approvals as markets look ahead to 2026.

Dow futures fell slightly on Wednesday after three days of losses for indexes. Investors prepare for the year’s last trading day, which will have minimal liquidity and New Year’s Day on Thursday. S&P 500 Futures down 0.15% to 6,934 points and Nasdaq 100 Futures fell 0.2% to 25,624.25 points at 07:30. Dow Jones Futures fell 0.1% to 48,605.0. As investors waited for the holiday, trading volumes were low. U.S. bond markets will close early on Wednesday. The financial markets fell on Tuesday, extending a late-December retreat that has hurt morale. The S&P 500 fell 0.1%, the Dow Jones Industrial Average 0.2%, and the NASDAQ Composite 0.2%. After the Federal Reserve’s December policy meeting minutes revealed policymakers’ views about interest rates in 2026, markets were uneasy. The Fed dropped rates by a quarter-percentage point, but the minutes showed that several members were growing wary of additional easing due to inflation pressures and economic uncertainties. Some argue that a long-term restrictive strategy may excessively reduce growth.

A Santa Claus rally, a pattern that is related with advances at the close of the year and early in January, was anticipated by investors in late December. Because of the decline in stock prices, such expectations have been dampened. Some analysts believe that seasonal optimism has been dampened as a result of limited market leadership and profit-taking following a successful year for main indexes. As a result of the fact that holidays compress the week and restrict the publication of economic data, the markets are driven by technical indications, policy expectations, and changes in portfolios at the end of the year.

Following the announcement that CEO Elliott Hill had purchased one million shares of Nike stock, the company’s price shot up 2.8% in premarket trading on Wednesday. According to the regulatory filings, Hill purchased 16,388 shares on December 29 at a price of $61.10 a share from the company. As the market conditions have become more difficult for Nike, the CEO of the sportswear giant purchased shares.

Hong Kong shares ended 2025 with straight yearly increases, their best percentage performance since 2017, spurred by an AI boom that boosted investor morale. The Hang Seng Index rose 28% last year, making it one of Asia’s top equities markets. Mainland Chinese equities rose significantly. The Shanghai Composite Index rose 18%, its best performance since 2019, after reaching its 10-year high in August. The tech-focused ChiNext Price Index rose 50%, while the Shenzhen Composite Index rose 29%. China’s rapid artificial intelligence advances and comprehensive governmental push to promote technical self-sufficiency and global trade resilience have boosted investor confidence. These developments eased concerns about poor domestic demand and deflation. China’s goods trade surplus exceeded $1 trillion for the first time in November, demonstrating its industrial sector’s resilience despite President Trump’s high tariffs on Chinese exports. In October, President Trump and Chinese leader Xi Jinping met for the first time in six years and reached a trade ceasefire, which boosted sentiment. “A one-year trade truce—albeit temporary—is positive for sentiment as it reduces concerns around the uninvestability” of Hong Kong and China equities, Nomura analysts said. Since the “DeepSeek moment” in January, when a Chinese firm released a massive language model competing with OpenAI’s ChatGPT, Chinese technology shares have performed well. In its 2026 five-year plan, Beijing would promote technical self-sufficiency. AI altered the game for Chinese tech shares, experts said. China’s top IT companies, Alibaba Group and Tencent Holdings, have gained 73% and 43.65%, respectively, while Baidu has gained 59%. The stock prices of newly listed AI chip manufacturers Moore Threads and MetaX rose over 400% from their initial offering pricing, while SMIC, China’s largest contract chip producer, rose significantly in Hong Kong. A study says AI-related efforts have helped Hong Kong reclaim its top IPO fundraising spot for the first time since 2019.

According to Wednesday reports, Nvidia has hired Taiwan Semiconductor Manufacturing to enhance manufacturing of its H200 artificial intelligence processors to meet Chinese technology business demand. Sources told that Chinese technology businesses have ordered over 2 million H200 processors for delivery in 2026, while Nvidia has 700,000 units. The report states that the U.S. chipmaker has asked TSMC to start making H200 chips in the second quarter of 2026. The quantity Nvidia will buy from TSMC is unknown. Sources said TSMC negotiations, Chinese demand, and price details have not been released. Nvidia plans to expand to improve its Blackwell chips and prepare for the Rubin line. In Nvidia’s previous Hopper architecture, the H200 is made using TSMC’s 4-nanometer technology. As Nvidia faces strong demand from China and limited availability in other regions, concerns about global AI chip supply limits arise. Regulatory concerns remain important. Despite the Trump administration’s clearance of H200 chip exports to China, Beijing has not yet approved any shipments. Nvidia plans to sell H200 variations to Chinese clients around $27,000 per chip, depending on purchase volume and customer agreements, according to the report. NVDIA said it actively manages its supply chain. “Licensed sales of the H200 to authorised customers in China will not affect our ability to supply US customers,” a spokeswoman said. Domestic chip vendors are rapidly expanding in China, creating a competitive environment. “Blocking all U.S. exports harms our national and economic security and benefits foreign competitors” it said. In response to rising Chinese demand, Nvidia has hired TSMC to boost H200 chip manufacturing. As reported earlier this month, the business plans to send H200 chips to Chinese customers before Lunar New Year in mid-February utilizing current inventories. About 100,000 GH200 Grace Hopper superchips, which combine Nvidia’s Grace CPU with the Hopper GPU architecture, are in Nvidia’s inventory. The rest are independent H200 chips. China will have access to both kinds. Chinese internet giants see the H200 as a big upgrade from their present CPUs, driving demand. Sources estimate that an eight-chip H200 module will cost 1.5 million yuan, compared to 1.2 million for the H20 module. The H200 is six times faster than the H20, a processor Nvidia built especially for China and subject to import restrictions. The article said Chinese internet corporations like the cost. The article says the pricing is 15% lower than grey-market rivals, which cost around 1.75 million yuan.