MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.9 percent, while shares in China nudged up 0.1 percent. Australian stocks gained two percent for the biggest intraday gain since July 21. Tokyo shares also jumped by more than one percent, Reuters reported.

Oil futures gave up their overnight gains and fell in Asia due to nagging worries about an increase in the supply of crude. US stock futures ESc1 were 0.02 percent higher in Asia.

An industry gauge released overnight indicated US manufacturing activity expanded in July at the fastest pace in more than a year, which helped Wall Street shares rise.

However, some investors remain cautious due to worries about a resurgence of the coronavirus and a diplomatic tussle over Chinese tech companies’ operations in the United States.

“It has been an upbeat US trading session and Asia will absorb the leads accordingly,” Chris Weston, head of research at Pepperstone, said in a market note.

The Dow Jones Industrial Average rose 0.89 percent, the S&P 500 gained 0.72 percent, and the Nasdaq Composite advanced 1.47 percent to set a record closing high as investors cheered the manufacturing data.

That data also caused the US Treasury curve to steepen, an indication of improved investor sentiment.

US stocks received an additional lift from Microsoft, which jumped 5.6 percent after it formally declared interest in buying the US operations of TikTok, a popular video-sharing app owned by Chinese tech company ByteDance. US President Donald Trump has threatened to ban TikTok unless its US operations are sold off from ByteDance.

Washington is also preparing to take action against other Chinese software companies that could share user data with Beijing, setting the stage for further conflict.

The dollar held steady against its counterparts as traders awaited progress in negotiations for additional economic stimulus.

Chicago Federal Reserve Bank President Charles Evans called forcefully for more US government spending to support the economy, saying “demand trouble is brewing” as existing relief policies expire.

Spot gold XAU was down 0.09 percent on Tuesday but still near a record high of $1,984.66 set on Monday amid support from virus fears.

US crude CLc1 dipped 0.61 percent to $40.76 a barrel, while Brent crude LCOc1 fell 0.59 percent to $43.89 per barrel due worries about extra supply coming to market.

Russia has started to increase oil and gas output. Other oil producers are also expected to increase output this month after OPEC and its allies agreed to ease production curbs.