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Nikkei continues to surge, leading Asian market gains

Asian equity markets were mostly higher on Monday, with a softer yen and rising metals prices driving stock-index gains in Japan and Australia, as appetite for global risk assets increased.

Several major markets were poised to hit record or fresh multiyear highs if the gains carry through to the close of trade, though analysts point to policy uncertainties ahead of a key Chinese political summit later this week that could weigh on investor sentiment.

The Nikkei Stock Average NIK, +0.47%   was up 0.7% in midday trade — on track to close at another 21-year high — helped in part by the U.S. dollar’sJPYUSD, +0.093091%   0.2% gain against the yen in morning trade, which lifted export and finance stocks. Local equities were also being supported by expectations Prime Minister Shinzo Abe’s government will comfortably win elections on Sunday.

Among major gainers in Japan, Nomura Holdings 8604, +1.48%   added 1.7%, Sony6758, +1.14%   was up 1.2% and SoftBank 9984, +1.28%  rose 1.2%.

Risk appetite in Asia was lifted by softer inflation data out of the U.S. on Friday, supported by the likelihood that smaller consumer-price gains could slow the pace of Federal Reserve rate increases, said Jingyi Pan, a market strategist at IG Group.

“Asian investors may also keep concerns of capital outflows further at bay,” said Ms. Pan.

In Australia, the S&P/ASX 200 XJO, +0.56%   was recently up 0.6% at 5848.40, and was roughly 150 points shy of a nine-year high, even though it was lagging behind gains in other markets and up just 3.2% year to date. Energy and mining shares were among the biggest gainers, driven by higher metals and oil prices, with Chinese iron-ore prices gaining around 2% earlier Monday.

Among heavyweight commodities stocks, miners Rio Tinto RIO, +3.43%   and BHP Billiton BHP, +2.24%  were up 3.1% and 2%, respectively, while the energy subindex rose 1.2%.

Elsewhere in the region, Singapore’s Straits Times Index STI, -0.03% STI, -0.03% and South Korea’s Kospi SEU, +0.26%  were each up 0.1%. India’s Sensex 1, +0.15% opened 0.7% higher, putting it on pace for its first record closing high since Aug. 1, while the Nifty 50 index hit an intraday record.

Hong Kong’s Hang Seng Index HSI, +0.69%   was up 0.9% at the midday break, looking set to close Monday at a fresh 10-year high. Analysts say an improving Chinese economy is a positive catalyst for Hong Kong-listed stocks, especially in the financial sector, which are have attractive valuations.

Still, investors will likely keep their focus this week on a key meeting of China’s political elite, the results of which could weigh on the region’s markets. The country’s 19th Communist Party Congress kicks off on Wednesday, and could introduce significant economic and political changes.

“This is likely to consolidate [President] Xi Jinping’s power in the party, which means reforms and anticorruption campaigns should continue,” said Iris Pang, an economist at ING. “This is positive for the sustainability of future economic growth.”

Meanwhile, consumer inflation in China slowed in September on renewed weakness in food prices, official data showed Monday. China’s consumer-price index in September rose 1.6% from the same period a year earlier, after a 1.8% gain in August, the National Bureau of Statistics said.

The Shanghai Composite Index SHCOMP, -0.36%   seesawed between losses and gains, and was down 0.1% at the end of morning trade. The main Shenzhen board was off 0.9%, while the startup-heavy ChiNext board was off 1.5%.

After early declines as uncertainty carried on around the formation of a new government following national elections, New Zealand’s NZ50GR, +0.02%  edged up slightly, with the benchmark index on course to close at a 10th consecutive record high.

In commodities, oil prices were higher in Asian trade, buoyed by fresh geopolitical concerns following comments from U.S. President Donald Trump on the Iran nuclear deal, as well as tensions involving the Kurds in Iraq. Brent, the global crude benchmark, was up 1.2%, while Nymex futures added 0.9%.