Asian Shares Rally On Fed Optimism

Asian stocks rallied on Monday, as signs of a resilient U.S. economy and hopes that the Federal Reserve will taper its hawkish stance outweighed investor disappointment over sluggish PMI data from the region.

Chinese shares posted strong gains even as a private survey showed activity in China’s manufacturing sector slowed in June. The Caixin/S&P Global manufacturing purchasing managers’ index dropped to 50.5 from 50.9 in May.

The benchmark Shanghai Composite Index jumped 1.3 percent to 3,243.98 on hopes that policymakers will deliver a strong economic stimulus package to boost growth.

Hong Kong’s Hang Seng Index surged 2.1 percent to 19,306.59, with electric vehicle makers spiking after Tesla announced it had delivered a record number of cars worldwide in the second quarter.

Japanese shares posted strong gains, with machinery makers rallying after the Bank of Japan’s quarterly “tankan” survey showed Japanese business sentiment improved in the second quarter.

Investors shrugged off separate data revealing that Japanese factory activity slipped back into contraction in June after expanding for the first time in seven months in May.

The Nikkei 225 Index shot up 1.7 percent to 33,753.33, marking a fresh 33-year high. The broader Topix Index settled 1.4 percent higher at 2,320.81.

Air-conditioner maker Daikin soared 6.8 percent and construction maker Komatsu added 2 percent. Tech stocks such as Screen Holdings, Tokyo Electron and Advantest climbed 3-6 percent.

Seoul stocks climbed as signs of easing U.S. inflation boosted technology stocks. The Kospi gained 1.5 percent to close at 2,602.47. Samsung Electronics advanced 1.1 percent and SK Hynix added 2.1 percent.

Top battery maker LG Energy Solution rallied 3.6 percent and smaller rival Samsung SDI spiked 7.2 percent after Tesla beat second-quarter delivery estimates.

A survey showed earlier in the day that South Korean factory activity shrank at a steeper pace in June and extended its downturn to a record 12th consecutive month.

Australian markets rose notably, with mining stocks pacing the gainers ahead of the central bank’s monetary policy meeting due Tuesday.

The benchmark S&P/ASX 200 Index rose 0.6 percent to 7,246.10, while the broader All Ordinaries Index ended 0.6 percent higher at 7,442.80.

United Malt Group jumped 8.6 percent after it received a binding offer from Malteries Soufflet, a branch of French agribusiness InVivo.

New Zealand’s benchmark S&P/NZX 50 Index finished marginally higher at 11,916.87.

U.S. stocks posted solid gains on Friday as new data showing lower consumer spending and cooling inflation fueled hopes the Fed could be nearing the end of its rate-hiking cycle.

The Dow gained 0.8 percent and the S&P 500 climbed 1.2 percent to reach the highest since April 2022, while the tech-heavy Nasdaq Composite jumped 1.5 percent to boast its biggest first-half gain in 40 years.

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