On Wednesday, Asian stocks were able to extend the global stock rally, as the expected resumption of gas supply in Europe from Russia and strong corporate earnings in the US gave sentiment a boost. They also helped ease worries of an economic recession, while the dollar was still languishing close to its lows of two weeks.

Asian shares rise

There was a 1.1% rise in the MSCI’s index of Asia-Pacific shares excluding Japan in early Asia trading. This was primarily because of a 1.1% rise in the South Korean stocks, a 1.5% in the resource-laden Australia shares, and a gain of 1.5% in Hong Kong shares as well. A 2.1% rise was also recorded in Japan’s Nikkei 225 index.

S&P 500 futures and Nasdaq futures both recorded gains of 0.3% and 0.4%, respectively. On Tuesday, US stocks had recorded sharp gains because of a rising number of companies reporting earnings better than their forecasts, same as in the case of banks.

This gave some respite to the investors who were concerned about the rise in inflation and the interest rate hikes of the Federal Reserve taking a toll on corporate performance and the bottom line.

The rallies

Netflix Inc. saw its shares record a gain of 8% in after-hours trading after the company predicted that this quarter would see its customers grow. The second quarter also saw its subscribers reduce by a smaller-than-expected number.

There was a 2.8% gain in the S&P 500, while a 3.1% gain was recorded in the tech-heavy Nasdaq Composite a day earlier. Market analysts said that equities had gotten a bounce not just because of the rally of tech stocks, but also because of news from Europe that had driven European yields higher and also given the euro a solid boost against the US dollar.

European news

According to a recent report, the European Central Bank (ECB) is planning on contemplating a hike of 50 basis points in the interest rate during its Thursday meeting. This is double the number that had been priced in by the markets, which assisted the euro in recording its biggest percentage gain in a day in about a month.

There was a 0.1% gain in the single currency, as it reached $1.0231 on Wednesday in early Asian trading hours. Moreover, sources have also revealed that gas flows through the Nord Stream 1 Russian pipeline will also resume from Thursday, July 21st, in accordance with the schedule. This helped ease the concerns of investors about a shortage in European gas supplies.

According to analysts, the day was turning out to be positive in terms of risks, but this did not mean that recession fears have eased completely. It is possible that the rebound seen in the equity markets in the previous week could be because of recovery from extreme pessimism levels and oversold levels.

A policy decision is also expected from the Bank of Japan on Thursday, but it is not expected to change its easy monetary policy in the meeting.