Asia-Pacific markets are set to rebound after S&P 500 hits new highs; Australia rate decision on tap

Asia-Pacific markets were set to open higher on Tuesday, ahead of the Reserve Bank of Australia's rate decision and tracking gains on Wall Street.

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.

Futures for Australia's S&P/ASX 200 stood at 7,743, rebounding from its last close of 7,700.3.

Japan's Nikkei 225 futures pointed to a stronger open for the market, with the contract in Chicago at 38,495 and its counterpart in Osaka at 38,430 compared to the previous close of 38,102.44.

Hong Kong Hang Seng index futures were at 18,018, higher than the HSI's last close of 187,936.12

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 this report.