Asian Shares Rally On Improved Risk Sentiment

Asian stocks posted strong gains on Monday as fears of prolonged inflation eased and data showed profits at China’s industrial firms shrank at a slower pace in May.

Treasury yields remained subdued and the dollar eased back slightly from a 20-year high reached earlier this month despite U.S. Federal Reserve officials keeping up their hawkish rhetoric.

As risk appetite improves, investors awaited the U.S. quarterly GDP growth rate numbers due this week to assess the outlook for U.S. rate hikes and the potential for a recession. Oil prices were volatile in Asian trading ahead of the G7 summit and the OPEC+ meeting.

China’s Shanghai Composite Index rose 0.9 percent to 3,379.19 after data showed profits across China’s industrial firms above designated size improved in May from the previous month.

Adding to the positive sentiment, a central bank advisor said China could consider trying to boost the economy by introducing special national bonds that don’t count as financial deficits.

Hong Kong’s Hang Seng Index jumped 2.4 percent to 22,229.52, led by gains in Chinese technology shares.

Japanese shares climbed for a third straight session, led by heavyweight technology stocks. The Nikkei 225 Index rallied 1.4 percent to 26,871.27, while the broader Topix closed 1.1 percent higher at 1,887.42.

Technology investor SoftBank Group jumped 3.7 percent, while Tokyo Electron, Advantest and Shin-Etsu Chemical rose 2-5 percent. Shipping stocks also posted broad-based gains, with Kawasaki Kisen Kaisha surging 9.6 percent.

Seoul stocks closed higher for a second day running amid speculation that inflation may have peaked and the pace of the Federal Reserve’s rate hikes could be slower than previously expected.

The Kospi gained 1.5 percent to finish at 2,401.92, with machinery and automotive stocks leading the surge.

Australian markets soared as firm commodity prices helped lift mining and energy stocks. The benchmark S&P/ASX 200 Index spiked 1.9 percent to 6,706 – rising for a third straight day and marking its biggest single-day gain since January 28. The broader All Ordinaries Index ended 1.9 percent higher at 6,893.60.

Gold stocks underperformed, with Evolution Mining plunging nearly 22 percent after the company cut its full-year gold output guidance.

Across the Tasman Sea, New Zealand’s benchmark S&P/NZX 50 Index rose 1.7 percent to 10,997.92 – marking its best session since March 17.

U.S. stocks rose sharply on Friday to snap a three-week losing streak as housing data surprised on the upside and a widely followed consumer sentiment survey showed a slight easing of inflation expectations.

The Dow climbed 2.7 percent to cap its first weekly advance since May despite a pair of U.S. central bankers supporting further sharp interest rate hikes to stem rapid price rises. The tech-heavy Nasdaq Composite surged 3.3 percent and the S&P 500 added 3.1 percent.

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