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BEIJING/HONG KONG — Asian shares extended a global rally on Wednesday as strong U.S. corporate earnings and the expected resumption of Russian gas supply to Europe helped lift sentiment and ease fears of a recession, while the dollar was mired near two-week lows.

MSCI’s broadest index of Asia-Pacific shares outside Japan surged 1.1% in early Asia trade, driven by a 1.5% jump in resources-heavy Australia, a 1.1% gain in South Korean shares and 1.5% jump in Hong Kong stocks .

Japan’s Nikkei surged 2.1%.

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S&P 500 futures rose 0.3%, while Nasdaq futures firmed 0.4%.

U.S. stocks closed with sharp gains on Tuesday as more companies joined big banks in reporting earnings that beat forecasts, offering respite to investors worried about higher inflation and Federal Reserve rate hikes denting the corporate bottomline.

Netflix Inc predicted that it would return to customer growth this quarter, after a smaller-than-expected drop in subscribers in the second quarter. Its shares gained 8% in after-hours trading.

The S&P 500 gained 2.8% while the tech-heavy Nasdaq Composite added 3.1% on Tuesday.

“In addition to a tech led rally in equities, the main news flow has been mostly about Europe which has lifted the euro back above 1.02 with core European yields also broadly higher,” said Rodrigo Catril, Senior FX Strategist at NAB, in a research note.

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A Reuters report that the European Central Bank was weighing a 50-basis-point rate hike at its Thursday meeting, double the hike many market participants had priced in, helped the euro rack up its biggest one-day percentage gain in a month.

The single currency gained 0.1% to $1.0231 in early Asia trade on Wednesday.

Sources also told Reuters that Russian gas flows via the Nord Stream 1 pipeline are seen restarting on time on Thursday after the completion of scheduled maintenance, easing investors’ concerns about gas supply to Europe.

“So it has been a risk positive night, but recession fears certainly haven’t gone away and the rebound in equities over the past week could as much reflect a recovery from oversold levels and extreme levels of pessimism,” said Catril from NAB.

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The Bank of Japan also delivers a policy decision on Thursday, but is not expected to make any changes to its ultra-easy stance.

On Wednesday, the dollar was little changed against its major peers, languishing near two-week lows amid easing expectations that the Fed would resort to a 100-basis-point hike at its meeting next week.

Markets still expect a large 75-basis-point interest rate rise from the Fed to rein in white-hot inflation.

A closely watched part of the U.S. yield curve remained inverted on Wednesday, with the two-year yield at 3.2353%, little changed from the previous close of 3.2310%.

The yield on benchmark 10-year Treasury notes stood at 3.0265% compared with its close of 3.019% on Tuesday.

In the commodities market, oil prices were pressured by global central bank efforts to tame inflation and ahead of expected builds in U.S. crude inventories as product demand weakens.

U.S. crude dipped 0.59% to $103.6 a barrel while Brent crude fell 0.36% to $106.95 per barrel.

Spot gold remained soft at $1,711 an ounce.

(Reporting by Stella Qiu in Beijing and Alun John in Hong Kong; Editing by Sonali Desai)

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