Asian stocks advanced on Monday as softer-than-expected U.S. inflation report raised hopes of Federal Reserve rate cuts and reports suggested that the United States and China were closing in on a trade deal.

Investors are anticipating a potential accord after top negotiators from both sides reported progress on contentious issues ahead of a meeting between Presidents Donald Trump and Xi Jinping later this week.

China's Shanghai Composite index rallied 1.18 percent to 3,996.94, hitting a new 10-year high following high-level trade talks in Malaysia.

According to U.S. Treasury Secretary Scott Bessent, Washington and Beijing have reached a "very substantial framework" that would prevent the U.S. from imposing 100 percent tariffs on Chinese goods and allow for a deferral of China's rare earths export controls.

Investors also cheered data that showed China's industrial profits soared 21.6 percent in September from a year ago, marking the biggest jump since November 2023.

Hong Kong's Hang Seng index surged 1.05 percent to 26,433.70, with tech and pharma stocks leading the surge.

Japanese markets soared to a record high on expectations of sizeable spending from the nation's new prime minister.

The Nikkei average jumped 2.46 percent to 50,512.32, closing above the psychological threshold of 50,000 for the first time. The broader Topix index settled 1.70 percent higher at 3,325.05.

Chip-related stocks rallied ahead of earnings from the biggest U.S. technology firms, including Apple Inc. and Microsoft Corp. SoftBank Group, Advantest and Fujikura surged 7-8 percent.

Seoul stocks reached a new high as technology stocks surged amid hopes for a comprehensive U.S.-China trade deal. The Kospi average rallied 2.57 percent to 4,042.83, surpassing the 4,000 mark for the first time.

Market bellwether Samsung Electronics rose 3.2 percent to 102,000 won, closing above 100,000 won per share for the first time. Chip rival SK Hynix jumped 4.9 percent.


Australian markets ended modestly higher, with miners, financials and technology stocks pacing the gainers on easing Sino-U.S. trade tensions.

The benchmark S&P/ASX 200 rose 0.41 percent to 9,055.60 while the broader All Ordinaries index closed 0.37 percent higher at 9,351.90.

Across the Tasman, New Zealand's benchmark S&P/NZX-50 index edged up by 0.11 percent to 13,391.59.

The dollar was steady in Asian trading as investors braced for the Federal Reserve's policy decision on Wednesday, where another interest-rate cut is widely expected.

Gold fell more than 1 percent toward $4,000 an ounce while oil edged down slightly after surging nearly 8 percent last week.

U.S. stocks hit record highs on Friday as cooler-than-expected CPI data reinforced views that the Fed will cut the fed fund rate by another 50 bps by year-end.

Data showed the consumer price index rose 0.3 percent month-on-month in September, bringing the annual inflation rate to 3 percent, just below the 0.4 percent and 3.1 percent that economists had expected. Core CPI came in at 0.2 percent and 3 percent on a 12-month basis.

Investor sentiment was also boosted by upbeat earnings news from big-name companies like Ford, Procter & Gamble and Intel.

The Dow rallied 1 percent, the tech-heavy Nasdaq Composite surged 1.2 percent and the S&P 500 added 0.8 percent to notch their second winning week in a row.