Asia Markets

Nikkei leads Asia equity rally on strong US data; China in focus

Asian equities enjoyed a broad-based rally on Monday, tracking a strong U.S. lead, with investor attention focused on developments in China.

On Wall Street, stocks rallied on Friday after consumer sentiment in early October rose to a seven-year high. Still, the S&P 500 still posted its longest weekly loss streak since 2011. Comments from Federal Reserve officials were in focus with Chair Janet Yellen voicing concern about income inequality on Friday, while St. Louis Fed President James Bullard said on Thursday that the central bank should think about postponing the end of its bond purchases.

"We believe Friday was a positive trading sentiment day. However, the question we need to ask ourselves is whether we believe Friday signalled the floor of the market? The jury is still out. We will want confirmation on a weekly basis before we get overly excited. We're mildly positive but cautious on Fed speak," said Evan Lucas, market strategist at IG in a note.

Attention in Asia was on China where members of the Central Committee of the ruling Communist Party will . The rule of law will be a key focus at the meetings, with expectations that provincial courts will be given more independence to limit influence by local authorities. The meetings will also be watched for whether Hong Kong's pro-democracy movement will be discussed following clashes and several arrests over the weekend.

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Nikkei rallies 4%

Japan's benchmark Nikkei rebounded after ending at a more than four-month low on Friday, finishing at its highest level in over a week and posting its biggest daily rise in more than a year. A weaker yen underpinned gains with the currency retreating from a five-week high hit last week.

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Reports that the country's $1.2 trillion public pension fund - the world's largest - will raise its allocation of domestic stocks to 25 percent helped to boost sentiment. The mood was also lifted after Prime Minister Shinzo Abe hinted that he may delay a second consumption tax rise in an interview with the Financial Times.

Mitsubishi Heavy Industries climbed over 5 percent after unveiling its new Mitsubishi Regional Jet (MRJ) over the weekend, the first passenger aircraft made in Japan in nearly four decades.

Real work begins for Indonesia's Jokowi
Real work begins for Jokowi

Jakarta Composite up 1%

Indonesian shares and the rupiah jumped to their highest levels in three weeks as Joko Widodo was sworn in as Indonesia's President. Investors will be paying close attention to his cabinet line-up and the reforms needed to accelerate economic growth.

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ASX 0.9% higher

Australia's benchmark ended at its highest level since October 1, up for the third straight session. Remarks from a senior central bank official supported sentiment; Assistant Governor Christopher Kent said that current monetary settings will support demand growth.

In M&A news, Transfield Services soared nearly 30 percent after the infrastructure firm rejected a A$1 billion takeover offer from Spain's Ferrovial. Engineering firm Downer EDI gained over 3 percent after announcing the purchase of Tenix Holdings for A$300 million.

Ten Network and Fairfax Media gained 7 and 3 percent, respectively, on reports that the two firms held talks about a merger.

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Shanghai up 0.6%

China's benchmark Shanghai Composite index rebounded after finishing at a more than three-week low on Friday. The mood was cautious ahead of Tuesday's gross-domestic product (GDP) report.

Banks in the spotlight following reports that the People's Bank of China may inject another 200 billion yuan into the sector; Agricultural Bank of China led gains by nearly 1 percent.

Meanwhile, Hong Kong stocks rose to a one-week high, extending gains into a second session.

What to watch out for in China's Plenum
What to watch out for in China's Plenum

Kospi gains 1.5%

South Korean shares ended at their highest levels in over a week after Friday's eight-month low. LG Display jumped nearly 5 percent in anticipation of better-than-expected third-quarter earnings on Monday.

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Nifty climbs 1.3%

Indian shares rose to a one-week high thanks to a rally in energy firms following the government's decision to remove diesel price controls and hike natural gas prices over the weekend.

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