Tokyo: Asian shares were on track for solid gains on Wednesday, after Wall Street's strong performance on upbeat results from two technology bellwethers offset investors' recent concerns about the outlook for the global economy.
MSCI's broadest index of Asia-Pacific shares outside Japan extended gains and was up 0.9 per cent, while Japan's Nikkei stock average added 1.7 per cent, rebounding from Tuesday's 2 per cent drop.
Asian sentiment also got a lift from the European Central Bank's plan to buy corporate bonds, a step that would help banks free up more of their balance sheets for lending. The ECB might decide on the matter as soon as December with a view to begin purchases early next year, several sources familiar with the situation told Reuters.
"The news triggered bargain-hunting as Japanese shares have fallen to levels which priced in the worst case scenario," said Toru Ibayashi, executive director at UBS Wealth Management, referring to fears that Europe's economy would fall back into recession.
In US trading, shares of Apple Inc and Texas Instruments Inc gained on stronger-than-expected quarterly earnings, lifting the tech-heavy Nasdaq Composite index more than 2 per cent. The S&P 500 added 1.96 per cent to mark its biggest daily percentage gain since October 2013 and its fourth straight rising session.
Japanese trade data released early Wednesday underpinned buying in Tokyo, as it showed Japan's exports rose 6.9 per cent in September from a year earlier, the fastest pace in seven months, a tentative sign that external demand is starting to pick up.
The upbeat mood in global equities markets sapped the safe-haven appeal of US Treasuries, pushing their yields away from last week's 17-month lows. The yield on benchmark 10-year US Treasury notes stood at 2.209 per cent in Asian trade, steady from Tuesday's US close of 2.208 percent.
Data on Tuesday showing a stronger-than-expected 2.4 per cent rise in US domestic home resales last month provided evidence that the US economic recovery maintained momentum and also put upward pressure on yields.
Higher US yields supported bolster the greenback, with the dollar index steady on the day at 85.278.
"Given heightened concern about falling inflation expectations, attention turns to the US September CPI report," strategists at Barclays said. "Our thesis of USD outperformance driven by relative US strength and interest rate divergence remains intact, but is at risk of delay pending soft underlying inflation trends."
The CPI report is due at 1230 GMT. Economists expect annual core CPI inflation to stay flat at 1.7 per cent in September, and a cooler reading would add to speculation that the Federal Reserve will wait longer before raising US interest rates.
The consensus view is that the US central bank will decide to wrap up its asset purchases under its third round of quantitative easing later this month at its October 28-29 policy meeting, though short-term interest rates futures implied markets do not expect the Fed to hike rates until late 2015.
The dollar inched lower on the day against the yen to 106.84 yen, while the euro nursed its losses after dropping on the ECB news, and edged slightly higher to $1.2728.
In commodities markets, Brent crude added about 0.1 per cent to $86.30 a barrel after posting solid gains on Tuesday, helped by data showing stronger-than-expected China demand and some technical price recovery after weeks of almost uninterrupted selling.
Spot gold was steady on the day at $1,248.75, not far from a six-week high marked in the previous session.
Copyright: Thomson Reuters 2014