TOKYO: Asian shares gained on Wednesday, taking cues from sharp gains in European and U.S. financial shares while the dollar was underpinned as investors count on the U.S. Federal Reserve to hike U.S. interest rates in coming months.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.4 percent while Japan's Nikkei jumped 1.7 percent.
U.S. new home sales data out on Tuesday showed a jump in April to their strongest monthly pace in more than eight years, with prices setting record highs.
Coming after a raft of positive U.S. data and comments from various Fed officials explicitly highlighting a chance of a Fed rate hike in June or July, the data helped to cement the case for a rate hike in coming months.
The yield on policy-sensitive two-year U.S. notes rose to a 10-week high of 0.930 percent
"There appears to be a consensus among Fed policymakers that they have to put a rate hike back on the table because markets had been pricing in almost no chance of a rate hike," said Koichi Yoshikawa, executive director of financial markets at Standard Chartered Bank.
Higher interest rates benefit financial shares as they increase interest income, helping to lift bank shares.
On Wall Street, S&P 500 Index <.SPX> rose 1.4 percent, helped by high-tech and bank shares.
European shares gained sharply overnight, led by financial shares, with the pan-European stock index <.FTEU3> rising 2.3 percent to its highest level since late April.
The news flows in Europe were generally positive for investor sentiment.
A UK poll showed a 13-point lead in support among Britons to stay in the European Union over their "Leave" rivals while Greek bond yields hit six-month lows as European finance ministers appeared likely to approve new loans to Athens.
In a major breakthrough, euro zone finance ministers also agreed a deal with Greece and the International Monetary Fund in the early hours of Wednesday that will address Athens's requests for debt relief.
The "Brexit" poll results helped the British pound
The sterling traded at $1.4622, near last week's peak of $1.4663, a break of which could open the way for a test of $1.4770, its four-month peak hit in early May.
In another clear sign of easing concerns on the "Brexit", implied volatilities on sterling options
The U.S. dollar held firm against most other currencies thanks to expectations of a rate hike by the Fed.
The dollar strengthened to 110.09 yen
The euro
The Australian dollar
Gold
Many emerging market currencies felt the dollar's heat but the Turkish lira
Oil prices held firm, helped by a rise in overall risk appetite and expectations of a drawdown in U.S. crude inventories.
U.S. crude futures
Brent crude futures
Already a subscriber? Log in.
Limited time offer:
Cancel anytime. No ads. Auto-renewal. Unlimited access to the web and app. Personalised features. Members rewards.
Follow us on our official WhatsApp channel for breaking news alerts and key updates!