The Asian Market Explosion That Will Change Everything Today

Shares are higher in Asia after U.S. stocks edged back from their records. Japan's Nikkei 225 index was among the region's top performers, gaining more than 2%. The rally was broad-based and reflected improved sentiment towards equities, following an announcement that the Chinese government plans to invest heavily in the country's infrastructure.

The Hang Seng Index in Hong Kong surged 1.5% and the Shanghai Composite Index rose by 1.2%. Markets in South Korea and Taiwan also rose, with the Kospi and the TAIEX climbing 1.4% and 1.1%, respectively. The turnaround in Asia followed a U.S. stock market which for the most part remained stable on Tuesday.

Futures contracts on Wall Street were seen trading higher ahead of the open, suggesting U.S. stocks are set to bounce back. That means Dow Jones futures are up 50 points, while those for the S&P 500 and the Nasdaq each gained around 0.4%.

Oil prices also advanced, following a report showing a fall in U.S. inventories. West Texas Intermediate crude was up nearly 1% and Brent was seen increasing by a similar margin. Bullish investors expect higher commodity prices to bolster shares in energy companies and boost overall market activity.

Investors are upbeat about future economic growth thanks to a positive surprise from an industry gauge of U.S. manufacturing. Strong manufacturing performance helped in underpinning bets for strong second-quarter corporate profits and extending this year's stock market gains.

According to some global strategists at the world's top financial institutions, stocks are expected to outperform bonds by year-end as the U.S. market bounces back, driving other nations upwards. And given the recent string of positive economic reports, U.S. Treasury yields can rise toward 6%, a development that may lead to increased optimism about continued growth.

China's infrastructure plans are expected to act as a big plus for steel and cement makers. Some of these stocks in China's leading steel-producing regions soared following the announcement about more state spending.

Although the announcement on the government's investments is largely in line with Chinese market expectations and was already factored in, investors are viewing this expansion in state spending positively. China might use more government funds for its 2024 projects, which will drive jobs creation and in that process create more demand for supplies and infrastructure building.

This particular trend may force market leaders to choose new sectors likely to perform better in the coming days. Analysts point out investors should buy into growth while reducing focus on battered companies considered defensive.