The positive sentiment on Wednesday came despite a backdrop of elevated trade tensions after China last week said it was preparing tariffs, ranging from 5 percent to 25 percent, on some $60 billion in U.S. imports. That came after U.S. President Donald Trump asked U.S. Trade Representative Robert Lighthizer to consider increasing proposed duties on $200 billion of Chinese goods to 25 percent.
Meanwhile, the USTR said on Tuesday that 25 percent U.S. tariffs on $16 billion in Chinese goods will take effect on August 23. An earlier wave of duties on $34 billion in Chinese imports took effect on July 6.
"Seeing is believing, it appears, with respect to the looming threat of a sharp escalation in trade tariff wars," Ray Attrill, head of foreign exchange strategy at National Australia Bank, said in a note.
"The U.S. stock market is behaving as though it doesn't take seriously the threat of Trump going ahead with the next phase of tariffs on China ... the implication being that if at some point [he] does, the market will surely correct significantly lower," Attrill added.
The yuan was mostly steady after taking a hit in recent months. The on-shore yuan slightly extended gains, trading at 6.8218 to the dollar at 2:56 p.m. HK/SIN, compared to a session low that exceeded 6.9 last Friday. The offshore yuan was slightly softer at 6.8300 to the dollar.
The Chinese currency has also weakened on a trade-weighted basis against a basket of currencies, based on the CFETS RMB Index, but that could also be slightly overdone, according to some.
"We would tell you it's probably weaker than it deserves to be because we've got uncertainty rather than the actuality of tariffs being imposed," CIBC World Markets Currency Strategist Patrick Bennett told CNBC's "Street Signs."
Wall Street rose on Tuesday, with the churn of positive earnings overshadowing investor concerns over recently proposed tariffs in the U.S.-China trade dispute. Through Friday, S&P 500 earnings are up 24 percent in the second quarter on a year-over-year basis.
Chinese stocks had rebounded on Tuesday after taking a hit in recent sessions, with the Shanghai Composite jumping more than 2 percent on the back of four consecutive sessions of declines.
Gains in Chinese shares in the last session came amid optimism over news of increased government spending on infrastructure. The People's Bank of China had also met with local banks earlier this week to highlight the importance of avoiding "herd behavior" in the currency markets, according to a Bloomberg report.
Among notable moves, shares of auto parts maker Hyundai Mobis jumped 2.9 percent while logistics unit Hyundai Glovis fell 4.04 percent. The moves came as investors reacted to a local media report on restructuring plans. Hyundai Motor shares advanced 2 percent.
Elsewhere, shares of China Tower made their debut in Hong Kong, trading mostly flat at 2:50 p.m. HK/SIN. The telecommunications tower company had priced its initial public offering at 1.26 Hong Kong dollars ($0.16) per share and had raised $6.9 billion, making it the largest IPO in the world in two years.
In currencies, the dollar index, which tracks the U.S. dollar against a basket of currencies, drifted lower. The index last stood at 95.094. Against the yen, the dollar slipped to trade at 111.08 at 2:50 p.m. HK/SIN, compared to levels around the 111.3 handle seen during Asia morning trade.
Correction: This report has been updated to reflect Patrick Bennett's company name correctly.