The upbeat tone that characterised this week helped Asian markets to fresh gains on Friday, with Hong Kong chalking up a sixth straight day of rises.
Investors globally have been riding a wave of optimism since the head of the Federal Reserve indicated it will likely slow its pace of interest rate hikes, while there were also signs that China and the US could eventually reach a trade deal.
And the gains were not limited to equities. Oil is up about 20 per cent from 17-month lows at the end of December and high-yielding currencies were being supported by a new-found demand for riskier assets.
Friday's rally followed another positive lead from Wall Street, where dealers brushed off disappointing retail figures as they focused on the prospect that borrowing costs will not rise as much as previously feared.
Fed minutes Wednesday showed policymakers are happy to hold off any more rate hikes as they assess the state of the economy, backing up dovish comments last week by its head Jerome Powell.
There was a slight wobble in New York after Powell on Thursday suggested the bank's securities holdings should be "substantially smaller" -- a sell-off by the Fed of such assets would lift interest rates.
But the general mood remained upbeat as a number of other top Fed officials indicated they were happy to see a break in hikes.
"Markets are ultimately waiting to see if the Fed's new rhetoric related to stepping back, does it translate to action, and does the Fed actually pause at some point," Morgan Stanley economist Dan Skelly told Bloomberg TV in New York.
"That's really what we are waiting for to see a sustained move higher" in stocks, he said.
Yuan holds gains
In Asia, Hong Kong rose 0.6 per cent -- meaning it has risen more than six per cent since last Thursday's close and is at a one-month high -- while Shanghai ended up 0.7 per cent and Tokyo added one per cent.
Singapore and Seoul each rose 0.6 per cent, Taipei jumped 0.4 per cent while there were also gains in Wellington, Bangkok and Jakarta, though Sydney, Manila and Mumbai eased.
In early trade London and Frankfurt each rose 0.3 per cent, while Paris added 0.2 per cent.
Markets are now awaiting the next development in the China-US trade spat after three days of talks this week that both sides indicated had been productive.
Bloomberg reported, without naming sources, that that top economics diplomat and Vice Premier Liu He will visit Washington at the end of the month for high-end talks with Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.
The Chinese yuan is one of the main beneficiaries of the progress in trade talks and softer Fed outlook, with the unit sitting at a more than five-month high against the dollar, despite a string of weak data pointing to a growth slowdown in the world's number-two economy.
However, observers were sceptical about how long it will maintain its strength.
"The yuan can hold up fine" until the Fed hikes rates again, trade tensions resume and Beijing ramps up its stimulus measures, Michael Every, head of Asia financial markets research at Rabobank in Hong Kong, said.
"It's a 'when' and not an 'if' for when it reverses direction again and we test new lows".
Other regional units were mixed Friday but were mostly holding up after a week of gains.
However, Mizuho Securities warned in a client note about the possible impact from the ongoing US government shutdown, which shows no signs of ending, and the Brexit vote next week that the government is likely to lose.
Oil prices were mixed at the end of one of the best week for the two main contracts in two years. The strong gains were much-needed after losses of more than 40 per cent from four-year between October and the end of December.
"Positive vibes on US-China trade talks, a relief rally in global equities, optimism in OPEC-led cuts and falling US rig count have raised oil prices significantly in the new year," said Phillip Futures commodities analyst Benjamin Lu.