Asian Shares Gain As U.S. Inflation Cools

Asian stocks advanced on Monday, tracking a broad rally on Wall Street Friday as soft inflation data bolstered hopes of more interest rate cuts his year.

Investors also looked ahead to the release of mega-cap U.S. tech earnings and central bank policy meetings in the United States, Japan and the U.K. for directional cues.

The dollar started the week on a weak note, while oil and gold prices rose on signs of escalating tensions in the Middle East.

The U.S. Federal Reserve will wrap up its policy meeting on Wednesday and the policy statement may provide clarity on whether there will be a rate cut in September. This week also brings U.S. jobs data on Friday.

China’s Shanghai Composite Index ended marginally higher at 2,891.85 ahead of July PMI data due this week. Hong Kong’s Hang Seng Index climbed 1.3 percent to 17,238.24 after data showed Chinese industrial profits experienced accelerated growth in June.

Japanese markets led regional gains ahead of a Bank of Japan policy meeting on Wednesday, where a rate hike may be on the table.

The Nikkei 225 Index closed 2.1 percent higher at 38,468.63 in a broad-based rally, rising for the first time in nine sessions. The broader Topix Index surged 2.2 percent to finish at 2,759.67.

Chip-related shares such as Tokyo Electron and Advantest shot up around 4 percent each, while AI-focused startup investor SoftBank Group added 2.3 percent. Silicon wafer maker Shin-Etsu Chemical soared 8.6 percent after first quarter earnings beat expectations.

Eisai lost almost 13 percent after the European Union regulator rejected an Alzheimer’s therapy jointly developed with Biogen Inc.

Seoul stocks rallied to end higher for a second day running on hopes the Fed will hint at a potential rate cut in September this week. The Kospi jumped 1.2 percent to 2,765.53.

Chipmaker SK Hynix gained 2 percent, carmaker Hyundai Motor surged 4.9 percent and auto parts maker Hyundai Modis climbed 1.1 percent.

Australian markets posted strong gains ahead of the release of key domestic inflation data for the second quarter on Wednesday. The benchmark S&P/ASX 200 Index advanced 0.9 percent to 7,989.60, while the broader All Ordinaries Index ended up 0.9 percent at 8,224.30.

Tech stocks logged solid gains, with Wisetech Global, Life360 and Macquarie Technology adding 2-3 percent.

Star Entertainment Group spiked 14.7 percent to a four-month high after reports that four international bidders had been circling in the past two months.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index slipped 0.3 percent to 12,313.62.

U.S. stocks climbed on Friday to finish a turbulent week on a positive note as a benign June PCE inflation report lifted hopes for more interest rate cuts this year.

Data showed the personal consumption expenditures (PCE) price index inched up by 0.1 percent in June, matching expectations. The annual growth rate slowed to 2.5 percent from 2.6 percent in May.

Personal income rose by less than expected in June, while personal spending increased in line with estimates. A measure of U.S. consumer sentiment deteriorated by slightly less than previously estimated in July.

The Dow surged 1.6 percent, the tech-heavy Nasdaq Composite rallied 1 percent and the S&P 500 added 1.1 percent.