China stocks extended declines on Friday in a bumpy start to the new year, despite gains in the broader Asia-Pacific region, as investors assessed Beijing’s policy signals.

Mainland China’s benchmark CSI 300 index fell 1.18% to close at 3,775.16480 after a volatile session, extending a decline of 2.9% the day before. Hong Kong’s Hang Seng index was up 0.42% as of its final hour of trade.

China’s bond yields hit record lows with the 10-year yield dropping 1.5 basis point to 1.598%, and 30-year government bond yield down 2.9 basis points at 1.819%, according to LSEG data.

The People’s Bank of China is reportedly planning to cut interest rates “at an appropriate time” this year, the Financial Times reported citing comments from the central bank. The country’s 7-day reverse repo rate is currently set at 1.5%.

In the year ahead, China will expand issuance of ultra-long bonds and ramp up efforts to boost consumption, senior officials from China’s National Development and Reform Commission told reporters Friday.

The officials reiterated plans to subsidize purchases of smartphones, smart watches and tablets, while increasing vocational training, pensions and support for gig economy workers.

Separately, China’s commerce ministry proposed to impose export restrictions on certain technology used to make battery components and for processing critical minerals like lithium and gallium, according to a notice issued on Thursday.

Investors in Asia will continue to assess the political uncertainty in South Korea as the country’s corruption watchdog failed to detain impeached President Yoon Suk Yeol after an hours-long standoff at the presidential residence, according to Yonhap News. Yoon’s short-lived martial law attempt on Dec. 3 has led to a political turmoil in the country.

South Korean markets, however, appeared to shrug off the political chaos, with the Kospi index rising 1.79% to close at 2,441.92 and the small-cap Kosdaq advancing 2.79% to 705.76. SK Hynix saw its shares surge 6.25%, as the chipmaker said it would unveil plans to position itself as a “full stack AI memory provider” at Consumer Electronics Show 2025 next week.

Australia’s S&P/ASX 200 rose 0.60% to settle at 8,250.50.

Japan markets remained closed for a holiday.

The three major U.S. indexes ended the first trading session of the new year lower, extending the weakness at the end of 2024, signaling the markets may not see a “Santa Claus rally” this year.

Investors were hoping for a “Santa Claus Rally” which spans the last five trading days of a year and the first two trading days of the following January. During this stretch of time, the S&P 500 has gained an averaged 1.3% while nearly 80% of the time finishing higher, Dow Jones Market Data going back to 1950 showed.

Overnight stateside, the blue-chip Dow Jones Industrial Average lost 151.95 points, or 0.36%, to end at 42,392.27, while the S&P 500 dropped 0.22% to 5,868.55 and tech-heavy Nasdaq Composite shed 0.16% to 19,280.79.

That marked the fifth straight session in the red for the S&P 500 and Nasdaq, their longest losing streaks since April. Big tech stocks weighed down the market, with Apple falling 2.6%, and Tesla slumping 6% on lower annual deliveries.

— CNBC’s Evelyn Cheng, Jesse Pound and Christina Cheddar Berk contributed to this report.