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Asian shares gain on politics in Tokyo and Sydney lifting sentiment

Investing.com -

Investing.com - Shares in Tokyo gained on Monday in Asia as investors saw solid poll results for Japan's upper house as signaling new rounds of economic and political reforms by the coalition government led by Prime Minister Shinzo Abe.

The Nikkei 225 jumped 3.28% as exit pols showed the government increasing its majority in the upper house. The S&P/ASX 200 was also higher, up 1.76%, as Liberal Party-leader and Prime Minister Malcolm Turnbull claimed victory after a tight election fight that apparently allowed him to cobble together a new coalition. The Shanghai Composite gained 0.44%.

In Australia, home loans data for May fell 1.0%, less than the 2.0% drop seen in May month-on-month, along with housing finance figuresthat rose 3.9% for the same month, reversing a 5.0% decline in April.

Earlier, in Japan, core machinery orders for May slumped 11.7%, sharply more than the 8.7% decline seen year-on-year.

Later Monday, finance ministers from the euro zone are to hold a meeting in Brussels and Kansas Fed chief Esther George is to speak at an event in Missouri.

At the weekend, China reported that the pace of gains in the Consumer Price Index moderated further to 1.9% year-on-year in June because of mainly weaker gains in food prices and at the slowest pace since January, when the National Bureau of Statistics changed the weighting of the basket of goods that make up the index.

Food prices rose 4.6% year-on-year in June, down from a 5.9% increase in May and 7.4% jump in April. Pork prices, the biggest driver of consumer inflation in the past few months, rose by 30.1% year-on-year, down from 33.6% year-on-year in May.

The data suggests that China is in a sustained period of moderate inflation even as worries about deflation have dissipated, making it less likely that the People's Bank of China will resort to aggressive monetary easing to support the economy, but also more likely it will keep rates low.

Last week, U.S. stocks rose sharply on Friday after robust job gains last months bolstered investor sentiment on the strength of the economy, while financial stocks remained supported by an uncertain interest rate outlook amid widespread concerns abroad.

On Friday morning, the U.S. Department of Labor's Bureau of Labor Statistics said nonfarm payrolls rose by 287,000 in June, defying expectations for gains of 180,000 and posting the highest monthly increase in eight months. While the unemployment rate inched up 0.2 to 4.9%, a broader measure of workers marginally attached to the labor market continued to tick lower, providing economists with optimism following a disappointing employment report in May. At last month's Federal Open Market Committee's (FOMC) June meeting, the Fed singled out a weakening labor market for prompting participants to lower the trajectory of their long-term rate path.

The Dow Jones Industrial Average soared 250.86 or 1.40% to 18,146.74, erasing all of its post-Brexit losses from late-June when the index plunged approximately 850 points over the span of two sessions. The NASDAQ Composite index also added 79.95 or 1.64% to 4,956.76, while the S&P 500 Composite index gained 32.00 or 1.53% to 2,129.90, moving fractions from its all-time record closing high of 2,130.82. On the S&P 500, all 10 sectors closed in the green as stocks in the Basic Materials, Industrials and Financials industries led.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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