Asia-Pacific markets rebound as Wall Street rallies overnight; Australia rate decision on tap

Asia-Pacific markets rebounded on Tuesday as Wall Street surged overnight, with investors awaiting the Reserve Bank of Australia's interest rate decision.

The RBA is expected to hold rates at 4.35%, but investors will be watching the language used in its monetary policy statement.

In a preview note, ING stated that "inflation more broadly is heading in the wrong direction, and that inflation is broadly based." Australia's headline inflation crept up to 3.8% in April, from a low of 3.4% in December 2023.

"Above all, we need to see month-on-month inflation rising at a significantly slower pace, or inflation is going to veer further off course over the second half of the year," the analysts add.

Australia's S&P/ASX 200 gained 0.92% ahead of the RBA decision.

Japan's Nikkei 225 rose 0.83% after plunging almost 2% on Monday, while the Topix was 0.48% higher.

On Tuesday, Reuters reported that Bank of Japan Governor Kazuo Ueda told the country's parliament that the central bank could raise rates in July, depending on the economic data available at the time.

South Korea's Kospi climbed 0.84%, led by gains in chipmakers Samsung Electronics and SK Hynix, which rose about 2.3% and 3%, respectively.

Automaker Hyundai also hit a fresh record, gaining about 3.05% on news that it plans to list its India unit in Mumbai.

Hong Kong's Hang Seng index slipped 0.17%, while mainland China's CSI 300 inched up 0.15%.

Overnight in the U.S., the S&P 500 rose to close at a fresh record as Wall Street looked to build on last week's gains.

The index added 0.77% to finish at 5,473.23, while the Nasdaq Composite surged 0.95%. The Dow Jones Industrial Average added 0.49%, to snap a four-day losing streak.

—CNBC's Samantha Subin and Tanaya Macheel contributed to