Asian shares edged up to near three-month highs on Wednesday and global equities held steady near a record as data showing higher U.S. manufacturing activity in May cheered investors looking for signs of a continued rebound in the world's largest economy.
U.S. manufacturing activity rose in May, the Institute for Supply Management (ISM) said on Tuesday, as pent-up demand boosted orders in a reopening economy, even as unfinished work piled up because of shortages of raw materials and labour.
Investors will be watching U.S. jobs data due Friday for clues to the Fed's plans for policy in the coming weeks and months.
Carlos Casanova, senior Asia economist at Union Bancaire Privee in Hong Kong, said reopening expectations had overtaken concerns about inflation.
"Yes, inflation will overshoot in the short term but the Fed is cognizant of that risk and they are looking at a dual target of full employment and inflation. So that has made investors less concerned potentially about the pace of Fed tapering this year, focusing more on the pace of reopening this year (and ) leaving that concern about tapering for next year or beyond," he said.
MSCI's gauge of stocks across the globe was flat after setting a record intraday high and close on Tuesday. Its broadest index of Asia-Pacific shares outside Japan ticked 0.08% higher, and Japan's Nikkei added 0.36%.
Seoul's Kospi gained 0.36% and Australian shares rose 0.64%.
Chinese blue-chips lagged as healthcare firms dropped a day after the sector was lifted by China's announcement of a third-child policy.
On Tuesday, U.S. stocks pared earlier gains following the ISM manufacturing data as investors mulled over the rebound and higher inflation.
The Dow Jones Industrial Average rose 0.13% to 34,575.31, the S&P 500 lost 0.05% to 4,202.04 and the Nasdaq Composite ticked down 0.09% to 13,736.48.
In commodities markets, prospects for a solidifying global economic recovery from pandemic lockdowns lifted oil prices, with Brent crude trading at its highest levels since March, despite the OPEC+ alliance agreeing to hike output in July.
Brent futures rose 0.6% to $70.67 per barrel and U.S. West Texas Intermediate crude added 0.56% to $68.10 per barrel.
"(The) wait and see approach by OPEC is likely to see the market remain tight for the foreseeable future. The likelihood of additional Iranian oil hitting the market in the short term is also subsiding," analysts at ANZ said in a note.
The dollar remained soft after a bump from the U.S. manufacturing data, reflecting a quickening global recovery outside the U.S.
The dollar index was slightly lower at 89.876, but it rose 0.11% against the yen to 109.57. The euro added 0.1% to $1.2223.
The U.S. 10-year yield was slightly higher at 1.6181% from 1.615% on Tuesday, and the policy-sensitive two-year yield rose to 0.1505% from 0.147%.
Higher Treasury yields helped to dent gold's appeal as the precious metal slipped below a near five-month price peak hit on Tuesday. Spot gold traded at $1,899.46 per ounce.