Asian Stocks Rally on Wall Street Gains

Most Asian stocks rose on Monday, tracking gains in Wall Street after softer U.S. inflation data fueled bets that interest rates could fall in the coming year.

Japanese stocks performed well, driven by speculation about a potential merger between Honda (NYSE:HMC) and Nissan (OTC:NSANY), with reports suggesting a deal is imminent.

Regional markets were positively influenced by Wall Street's surge on Friday, after the PCE price index — the Federal Reserve’s preferred inflation gauge — registered softer-than-expected results for November. This eased some concerns regarding the pace of U.S. rate reductions in 2025, particularly following the Fed's hawkish tone in a recent meeting.

U.S. stock futures saw gains in Asian trade, buoyed by optimism surrounding the U.S. government’s potential to avoid a shutdown.

Japanese Shares Rise Amid Honda-Nissan Merger Reports

Japan’s Nikkei 225 and TOPIX indexes increased by 0.9% and 0.5%, respectively. Market enthusiasm stemmed from reports by NHK about a preliminary agreement between Honda and Nissan slated for signing later on Monday, aiming to finalize merger terms by June 2025.

Honda's stock rose nearly 2%, while Nissan dipped slightly after a 20% rally last week. Mitsubishi Motors Corp. (TYO:7211), potentially involved in the merger, increased by 2.8%.

The merger could position the new entity as the third-largest global automaker by sales, as Honda and Nissan address growing competition and decreasing sales, particularly in the key Chinese market.

In addition to the merger speculation, Japanese markets were attentive to Friday's inflation data, which exceeded expectations for November, reinforcing the likelihood of interest rate hikes by the Bank of Japan.

Asia Stocks Rise with Focus on U.S. Rates, China Stimulus

Broader Asian markets advanced on Monday, bolstered by the optimism surrounding softer U.S. inflation, though many regional markets were still recovering from last week's losses.

Australia’s ASX 200 posted a 1.2% rise, with local shares of News Corp (ASX:NWS) (NASDAQ:NWSA) climbing 2.2% after announcing the sale of broadcaster Foxtel to DAZN Group for A$3.4 billion ($2.1 billion).

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes increased by 0.6% and 0.2%, respectively, while Hong Kong’s Hang Seng index grew by 0.5%.

Chinese markets benefitted from recent sessions of gains, following Beijing's commitment to ramp up fiscal spending in 2025 to bolster economic growth.

South Korea’s KOSPI rose 1.5%, leading the region as investors bought into undervalued stocks following a recent political turbulence.

Singapore’s Straits Times Index saw a 1.1% increase, spurred by Talkmed Group Ltd (SGX:TALK), which surged nearly 6% after receiving a privatization offer. However, Singapore Post Ltd (SGX:SPOS) fell 8% after the dismissal of its CEO over misconduct allegations.

Futures for India’s Nifty 50 index pointed to a slight positive opening after a significant decline last week.