Asian stocks rose on Wednesday, tracking modest Wall Street gains, as expectations that a vaccine will eventually win the battle against the coronavirus fuelled recovery hopes, while tight supply expectations pushed oil prices to a one-year high.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.45%. Chinese shares rose 0.34% while South Korea's KOSPI gained 0.04%.
Japan's Nikkei 225 rose 0.49%, but Australia's S&P/ASX 200 bucked the regional trend and fell 0.12%.
US stock futures edged up by 0.15%.
Treasuries extended their rally in Asian trading, which pulled benchmark 10-year yields further away from the highest in almost a year and caused the yield curve to flatten slightly.
Investors were betting that the incoming Biden administration would ramp up US distribution of coronavirus vaccines, which would allow large parts of the US economy to reopen, said Peter Essele, head of portfolio management at Commonwealth Financial Network in Boston.
"The amount of pent-up demand is slowly being unwound and over the next year it is probably going to result in one the strongest growth in 20 years and markets are pricing that in," Essele said. "Right now, it's a race between cases and the vaccine and the vaccine will ultimately win out and the curve will flatten out."
On Wall Street, stocks fluctuated near unchanged for the session, not far from record highs. The Dow rose 0.19%, the S&P 500 gained 0.04% and the Nasdaq Composite added 0.28%.
US West Texas Intermediate (WTI) rose 0.81% to $53.64 a barrel, reaching the highest since February after a larger-than-expected decline in US crude inventories. Brent crude rose 0.87% to $57.07.
Oil prices were also supported after Saudi Arabia said it plans to cut output by an extra 1 million barrels per day in February and March.
Some investors were monitoring developments in Washington after at least three Republicans said they would join Democrats in a vote expected Wednesday to impeach President Donald Trump over the attack on the US Capitol.
With seven days remaining in his term in office, Trump faces impeachment over accusations that he incited insurrection in a speech to his followers last week before hundreds of them stormed the Capitol, leaving five dead. Trump says his speech was appropriate.
An impeachment trial could proceed even after Trump leaves office on Jan. 20, but analysts say they don't expect any further political turmoil in Washington to affect markets. "Markets since the election have been quite strong because uncertainty factor has been removed," Essele said.
Yields on benchmark 10-year US government debt fell to 1.1120% on Wednesday in Asia, down from an almost one-year high of 1.1870% reached in the previous session after a well-received auction of new 10-year notes.
The yield curve, which had reached the steepest since May 2017 on expectations for big fiscal stimulus under a new Democratic administration, narrowed slightly to 96.6 basis points.
The dollar nursed losses on Wednesday as a retreat in US yields snuffed out its recent rebound.
Against the yen, the greenback fell 0.18% to 103.58. The dollar also edged lower to $1.3679 against the British pound.
Safe-haven spot gold added 0.28% to $1,860.51 an ounce.