Investing.com - Asian stock markets experienced a surge on Wednesday, while the dollar took a step back as traders adjusted their U.S. interest rate expectations following a dovish shift from Federal Reserve officials. However, all eyes remain on the U.S. inflation data scheduled for release on Thursday.
Following gains in the S&P 500 overnight, MSCI's broadest index of Asia-Pacific shares outside Japan climbed 1.3% to reach a two-week peak in morning trade. Concurrently, Japan's Nikkei rose by 0.5%.
Speculations over another potential interest rate hike by the Fed this year have receded this week, resulting in a sharp fall in Treasury yields from 16-year highs and dragging the dollar down with them. The 10-year yield experienced a drop of 12.7 basis points on Tuesday and held steady in Asia on Wednesday at 4.64%, after touching 4.884% post the release of robust U.S. jobs data on Friday.
Meanwhile, the Australian and New Zealand dollars eased from their highest levels against the dollar since late September on Wednesday, while the sterling pound hit a three-week peak. The euro remained near Tuesday's two-week high at $1.0607, as traders await the U.S. CPI figures on Thursday.
A Bloomberg News report suggesting China's preparation of economic stimulus measures lent further support to market sentiment. However, caution prevailed as real estate giant Country Garden issued a warning regarding its inability to meet offshore payment obligations on time.
In the commodities market, oil prices have seen a slight decline since Monday's surge, which was stimulated by concerns that the unexpected attack on Israel by Palestinian militants could lead to a broader conflict. Brent crude futures steadied at $87.80 a barrel on Wednesday, after reaching $89 on Monday. European gas prices, which had spiked due to the Middle East violence, soared further on Tuesday amid worries of sabotage to a gas pipeline in Finland.
The yen managed to hold onto a modest gain as the tension in the Middle East bolstered safe-haven assets. U.S. stock futures remained stable in Asia.
Shares of Samsung Electronics Co Ltd (KS:005930) soared on the back of a smaller-than-anticipated drop in third-quarter profit and optimism over a potential turnaround in the memory chip market.
PepsiCo Inc (NASDAQ:PEP) kicked off the U.S. earnings season with an encouraging report showing a slight 2.5% dip in volume, but an 11% increase in prices. The company's CFO indicated that more price hikes are expected next year.