Asian shares came within reach of their 2016 highs on Wednesday as prospects of solid US growth and accommodative economic policy in major markets whet investors' risk appetite damaged by uncertainty from Brexit.
Spreadbetters expected European shares to take a breather following days of gains, forecasting a slightly lower open for Britain's FTSE, Germany's DAX and France's CAC . US stock futures dipped 0.1 per cent.
MSCI's broadest index of Asia-Pacific shares outside Japan rose as much as 0.4 per cent to 427.83, just below its year-to-date high of 428.22 hit on April 21.
Japan's Nikkei gained 1.1 per cent.
Australian stocks added 0.5 per cent and South Korea's Kospi rose 0.6 per cent. New Zealand shares inched down 0.1 per cent but were near a record high struck Tuesday. Shanghai advanced 0.4 per cent.
“A while ago, everything looked so uncertain on Brexit. But now that the UK looks set to have a new prime minister ... that is soothing investor sentiment,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management.
UK's new prime minister
Britain's interior minister Theresa May is set to take over as prime minister on Wednesday.
Elsewhere, Philippine shares reached a more than 1-year high and Vietnam scaled an 8-year peak.
Abe's stimulus package
In Japan, Prime Minister Shinzo Abe ordered a new round of fiscal stimulus spending, as expected, after an election victory on Sunday.
Abe's meeting on Tuesday with former US Federal Reserve Chair Ben Bernanke, a proponent of “helicopter money” policies - printing money and directly handing it to the private sector to stimulate the economy - fuelled speculation that some of Abe's stimulus plan could be funded by the Bank of Japan's easing.
Such expectations pushed down the yen 4 per cent over the last two days. The yen last traded at 104.22 yen to the dollar.
Stimulus awaited
The Bank of England makes its policy announcement on Thursday, with some players expecting a rate cut.
The European Central Bank is also widely expected to take a dovish stance when it holds its policy review a week later.
“After being faced with the prospect of a major slowdown in global activity in the wake of the Brexit vote, governments and central banks worldwide are now expected to do their utmost to reassure markets and provide stimulus,” wrote Angus Nicholson, market analyst at IG in Melbourne.
“This has led to an incredible rally in equities and industrial commodities. Of course, should those expectations fail to eventuate they could stop the rally short. The greatest unknown for markets is what will happen in mainland Europe.”
The pound traded at $1.3308 after surging almost two per cent on Tuesday, pulling away from a 31-year low of $1.2798 struck late in June, as investors bought back the currency on May's appointment as prime minister.
The euro was little changed at $1.1066.
Crude oil
In commodities, oil prices dropped after industry group American Petroleum Institute (API) reported a surprise build of 2.2 million barrels in U.S. crude stockpiles last week.
Brent crude futures fell 1.2 per cent to $47.90 after surging roughly 5 per cent on Tuesday on broad improvement in risk sentiment.
Zinc touched a 13-month high of $2,210 a tonne and nickel climbed to a 10-month peak of $10,670 a tonne. Aluminium and copper have also gained.