Asian stocks have experienced a strong rally as investors become increasingly confident that the US Federal Reserve will proceed with only a small rate hike at their upcoming meeting; the decision was spurred by steady US inflation data, which led investors back to the stocks in US markets.
This follows last week's collapse of Silicon Valley Bank, which triggered heavy selling in recent trading sessions.
Asian stock markets surged on Wednesday, with the MSCI's broadest index of Asia-Pacific shares outside Japan up 1.44%, after data showed that US inflation was steady and the recent fears over contagion in the banking sector following the collapse of Silicon Valley Bank (SVB) subsided.
Investors piled back into US stock markets overnight after the inflation data was released, as it reinforced the belief that the Federal Reserve may only implement a small rate hike when it meets for its next session.
However, some believe that while there is optimism in the markets, it would be wise to be cautious.
"We may be seeing a temporary bounce back following the market sell-offs over concerns of rising interest rates", according to Margaret Yang, a market analyst with CMC Markets.
Despite concerns, Asian markets continued to rise with China's shares up 0.46% and Hong Kong's Hang Seng index up 1.4%, while Japan was mostly flat.