Asian shares gave up earlier gains Wednesday, though Japanese and Australian stocks outperformed, helped by an improvement in appetite for risk, which pushed the U.S. dollar and commodity prices higher overnight.
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Commodities led the charge in European and U.S. trading on Tuesday, with copper prices jumping 4% and oil rising more than 3%. That's particularly good for Australian stocks, where a big market segment is mining and energy companies.
The S&P/ASX 200 was recently up 1%. Mining heavyweights BHP Billiton (BHP.AU) (BHP.AU) (BLT.LN) and Rio Tinto (RIO) (RIO) (RIO) rose about 3% while oil firm Santos advanced 4%.
"The gains in copper and oil are speaking to an improved industrial outlook," said Michael McCarthy at CMC Markets.
Oil was also supporting Hong Kong's Hang Seng Index , which coming into Wednesday had risen for 11 of the prior 12 trading days. The index was little changed at the midday break, with PetroChina (0857.HK) and Cnooc (0883.HK) rising 3.3% and 2.5%, respectively.
Meanwhile, stocks in South Korea, Taiwan and China edged lower by midday after gaining slightly earlier.
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In Japan, a rebounding dollar and higher Treasury yields -- both a sign of increased risk appetites --helped stocks after the Nikkei Stock Average logged three straight days of declines.
It was recently up 0.5% as the dollar moved briefly back above Yen112 in morning trading, nearly 1% higher than where the pair traded at the end of Tuesday's stock trading.
Often a stronger dollar results in weaker commodities prices as many such products are denominated in the U.S. currency. But rising despite that shows investor optimism.
Oil prices added to their overnight gains in Asian trading, rising nearly 1% Wednesday morning after the American Petroleum Institute said its inventory data showed U.S. crude supplies slumped 10 million barrels last week, quadruple the drop in supply expected from U.S. Department of Energy data due later on Wednesday.
The dollar rose overnight after Senate Republicans were able to come up with enough votes to start debate on a possible health-care overhaul bill. Inability to move legislation so far this year on Capitol Hill has tempered postelection hopes about the Trump administration.
On tap later Wednesday is the Federal Reserve's latest policy statement, which isn't expected to include any changes. Despite the U.S. central bank's move toward normalizing rates, soft inflation in Asia is leading central banks in the region to stand pat.
Read:Fed to stick to plans for rate hike, balance-sheet selloff this year (http://www.marketwatch.com/story/no-retreat-fed-to-stick-to-plans-for-rate-hike-balance-sheet-selloff-this-year-2017-07-24)
Reserve Bank of Australia Gov. Philip Lowe said Wednesday the central bank doesn't need to change its policy stance because of moves by peers or fresh weakness in domestic inflation. Data from Australia earlier in the day showed muted inflation in the second quarter.
The Australian dollar was recently off 0.4% against major currencies, reversing some of the month's sharp gains.
(END) Dow Jones Newswires
July 26, 2017 00:51 ET (04:51 GMT)