China stocks surge more than 4 percent, extending Friday's rally

  • Asia Pacific markets were mostly higher on Monday as major Chinese indexes jumped more than 4 percent.
  • Stocks in Australia, however, fell amid fresh uncertainties in the country's political outlook.

Asia Pacific markets mostly rose on Monday as major Chinese indexes leaped more than 4 percent.

The Shanghai composite added 4.09 percent to close at around 2,654.88. Earlier in the day, the index saw gains of more than 4.5 percent.

Elsewhere, the Shenzhen composite gained 4.899 percent to close at about 1,325.73.

The moves followed Friday's rally in Chinese stocks as authorities took steps to support the market after the release of weaker-than-expected GDP data.

One market observer, however, voiced skepticism over the recent rally in mainland Chinese stocks.

"Eventually, at the end of the day, fundamentals will still rule," Vasu Menon, vice president of group wealth management at OCBC Bank told CNBC's "Street Signs" on Monday morning.

Menon pointed out there were lingering concerns over Beijing's trade war with Washington. "It doesn't look like it's going to end anytime soon," he said.

"You see a rebound today, but does it mean that the markets have turned a corner and you know, will hit higher? I'm not sure. I don't think so," Menon said.

In Japan, the Nikkei 225 erased earlier losses to close 0.37 percent higher at 22,614.82 while the Topix index gained 0.15 percent to end the trading day at 1,695.31. South Korea's Kospi gained 0.25 percent to close at 2,161.71. In Hong Kong, the Hang Seng index rose 2.22 percent in afternoon trade.

Symbol
Name
Price
 
Change
%Change
NIKKEI
---
HSI
---
ASX 200
---
SHANGHAI
---
KOSPI
---
CNBC 100
---

Australia hit by political uncertainty

Down Under, the benchmark ASX 200 retraced some of its earlier losses but shed 0.58 percent to close at 5,904.9 amid fresh uncertainties in the country's political outlook. Most sectors ended the trading day lower, with the heavily weighted financials subindex down 0.75 percent while the energy sector declined 0.82 percent.

The Australian dollar traded at $0.7121 in afternoon trade, recovering from an earlier low of $0.7086.

Australian Prime Minister Scott Morrison will meet with independent lawmakers as early as Monday to try and shore up support for his government, according to Reuters.

The ruling Liberal Party saw a 20 percent swing against it at a crucial by-election in Sydney and is poised to lose its one seat parliamentary majority, the news wire said. That would leave Morrison's government reliant on support of five independent lawmakers to survive.

"It will increase market conviction that as and when the next election does occur (no later than May 2019) it is likely to produce a change of government," Ray Attrill, head of foreign-exchange strategy at the National Australia Bank, wrote in a morning note.

Currencies and oil

The U.S. dollar index, which tracks the greenback against a basket of its peers, traded at 95.502 in the afternoon, coming off an earlier high of 95.756.

The Japanese yen was at 112.70 against the dollar, weakening from levels below 112.2 last week.

Elsewhere, oil prices gained Monday afternoon. Global benchmark Brent traded 0.53 percent higher at $80.2 per barrel while the U.S. crude futures traded up 0.69 percent at $69.6.

— CNBC's Evelyn Cheng contributed to this report.