Asian stocks surged on Monday, buoyed by soft U.S. inflation data that reignited hopes for rate cuts, coupled with a private survey indicating China's factory activity grew at the fastest pace in nearly two years in May due to increased production and new orders.
Indian markets spearheaded regional gains as exit polls suggested Prime Minister Narendra Modi is poised to secure a third consecutive term. Should Modi win, he would become the second Indian leader to hold power for three terms, following Jawaharlal Nehru.
The dollar began the week on a subdued note, while oil and gold prices remained relatively stable in Asian trading as mediators encouraged Israel and Hamas to agree to a truce and a hostage release deal proposed by the U.S.
Chinese shares ended a volatile session slightly lower, despite positive manufacturing data. The benchmark Shanghai Composite index fell by 0.27 percent, closing at 3,078.49.
The Hang Seng index in Hong Kong surged 1.79 percent to 18,403.04, driven by a rally in technology stocks after NVIDIA Corporation introduced a new line of artificial intelligence chips.
Japanese markets experienced a significant uptick after a survey indicated an improvement in Japan's manufacturing economy for the first time in a year in May. The Nikkei average rose by 1.13 percent to 38,923.03, while the broader Topix index increased by 0.92 percent to 2,798.07.
Financial stocks led the gainers, anticipating benefits from a higher interest rate environment. Daiwa Securities Group soared 5.6 percent, and Nomura Holdings climbed 4 percent.
Conversely, automakers saw declines after irregularities were found in model applications from five major auto companies, as reported by the transport ministry. Toyota Motors dipped 1.8 percent, and Mazda Motor lost 3.3 percent.
Seoul stocks moved higher after a survey revealed South Korea's factory activity expanded in May at the fastest pace in two years. The Kospi average rallied 1.74 percent to 2,682.52, with tech giants Samsung Electronics and SK Hynix each gaining around 3 percent.
Australian stocks also posted notable gains, driven by encouraging manufacturing data that pointed to an economic recovery. The benchmark S&P/ASX 200 increased by 0.77 percent to 7,761, led by the mining and financial sectors. The broader All Ordinaries index closed 0.67 percent higher at 8,024.10. Markets in New Zealand were closed for a public holiday.
Indian shares outperformed regional peers after exit polls indicated the Bharatiya Janata Party (BJP)-led NDA might secure over 350 of the 543 seats in the Lok Sabha. The benchmark S&P BSE Sensex rose by more than 3 percent.
U.S. stocks ended mostly higher on Friday, with Treasury yields easing after the Federal Reserve's preferred inflation measure met estimates, posting the smallest increase this year at 2.7 percent in April. This development has bolstered hopes for an interest rate cut by the end of the year.
Wage growth moderated, consumer spending growth weakened more than anticipated, and income growth for Americans also slowed, alleviating investor concerns about inflation and interest rates.
The Dow Jones Industrial Average surged by 1.5 percent, the S&P 500 added 0.8 percent, while the tech-heavy Nasdaq Composite finished marginally lower.
