Asian Shares Soar on Hopes for U.S. Policy Shift

Asian shares climbed as optimism grew for U.S. policy easing following a modest U.S. inflation report, avoiding a government shutdown. The dollar's strength pressured commodities and emerging markets. Wall Street surged with possible Federal Reserve rate cuts, as bond yields soared and currency markets remained tense.

Asian shares surged on Monday as a benign U.S. inflation report raised hopes for potential policy easing next year, while relief spread across markets with the U.S. averting a government shutdown. The current week is expected to be quieter, with few central bank announcements and secondary U.S. data.

The persistent themes include a strong dollar supported by the U.S. economy and high bond yields, impacting commodities and gold negatively. Emerging market countries face challenges as they intervene to prevent their currencies from depreciating significantly, which could increase domestic inflation.

Following the uplifting inflation data, MSCI's broadest index of Asia-Pacific shares outside Japan saw a 0.3% rise. Market analysts are cautious about the market's concentration on a few large companies, a potential vulnerability as we head into 2025.

(With inputs from agencies.)