Chinese markets closed lower, extending recent losses as investor sentiment remained cautious over economic recovery, domestic policy support, and escalating geopolitical tensions. The blue-chip CSI 300 fell by 0.2 percent, reaching its lowest level since late September, while the Shanghai Composite dipped slightly by 0.1 percent to 3,206.92 points. The Hang Seng Index in Hong Kong also declined by 0.4 percent to 19,688.29.

Sectors such as consumer staples and liquor distillers led declines, with losses of 1.9 percent and 2.9 percent, respectively. Despite an encouraging uptick in China's services activity in December, weakening overseas orders highlighted growing trade risks. Analysts have flagged ongoing geopolitical uncertainties and their potential impact on global capital flows and economic growth in 2025.

In response, both the Shanghai and Shenzhen exchanges pledged further capital market openness during meetings with foreign institutions over the weekend. Large mutual funds were also reportedly urged to limit stock sales to stabilize volatility. Meanwhile, the Chinese yuan weakened to a 16-month low against the United States dollar despite efforts to anchor the currency through strong daily fixings.