Asian markets climb after bumper Wall Street session

Japanese shares surged nearly four per cent on Thursday morning, with investors heartened by Wall Street's best performance in nine years after the White House said Fed Chair Jay Powell would not be fired.

Asian markets followed Tokyo's lead with more modest gains in morning trade, giving some welcome relief from a lingering global market downturn.

The Hang Seng index in Hong Kong was up 0.7 per cent by mid-morning.

Taiwan and Sydney both climbed 1.5 per cent, and Singapore stocks rose by 1.6 per cent.

"Thankfully for investors, the relentless selling on the back of risk-off sentiment which prevailed leading up to Christmas has mercifully halted... with the Dow surging over 1,000 points while adding the most significant points gain in history," said Stephen Innes, head of APAC trading at OANDA.

Wall Street stocks roared back to life in post-Christmas trade on Wednesday, shaking off four straight routs following strong retail sales data and White House reassurances that Fed Chair Jerome Powell won't be fired.

Sentiment also improved after a Bloomberg News report said a US government delegation will travel to Beijing in early January to hold trade talks, the first face-to-face discussion since US president Donald Trump and Chinese president Xi Jinping agreed on a 90-day trade war truce.

The Dow Jones Industrial Average finished up nearly 1,100 points, or about five per cent, with the broad-based S&P 500 also surging five per cent.

"It was possible that risk appetite wouldn't recover until after the new year but thanks to the upturns in Tokyo and New York, we are likely to see the new year in with a somewhat brighter mood," Mizuho Securities said in a note.

Underlying caution

Many investors have been unnerved by a variety of factors, including the partial US government shutdown, the US-China trade war and Trump's ongoing criticism of Fed Chair Powell.

But while a sense of relief won out for now, analysts warned that there was still much uncertainty in the market.

"Don't get too comfortable as discussions regarding the various political and policy questions remain hanging in the balance," said Innes.

US stock-index futures fell as much as 0.6 per cent on Thursday, suggesting investors are unlikely to sustain Wednesday's market rally when US markets open.

Kyle Rodda, a Melbourne-based market analyst at IG Group Holdings Plc, told Bloomberg News investors "are still nervous about how financial markets and the global economy will go during a cyclical slowdown without central bank support".

The euro remained weak against the dollar after falling in New York.

Mizuho Bank said: "Many market players expect the dollar would likely drop against the yen early next year as factors that could fuel risk aversion or prompt dollar selling are lining up."

They include risks of a no-deal Brexit, the 28 February deadline for the Trump administration in trade talks with China and chances that the Federal Reserve would pass on a rate hike expected in March, it said.

Meanwhile oil markets lost some of their gains as crude prices slid Thursday, after jumping nearly nine per cent Wednesday to mark the biggest gain in more than two years.

Gold has also been soaring and was set for its biggest monthly gain in almost two years, with investors seeking safe havens amid the partial US government shutdown and concerns about the global political and economic outlook.