On Wednesday, Asian shares rose in volatile trade with the dollar paring early gains as investors weighed the potential impact of US House Speaker Nancy Pelosi’s visit to Taiwan, angering China.

Despite heightened tensions between the US and China, which view Taiwan as an independent province, demand for the safest assets has waned, and bond yields have been helped.

“In the long run, there will be more friction between the US and China,” said Redmond Wong, Greater China market strategist at Saxo Financial in Hong Kong. “We’ve seen overseas investors sell Chinese stocks.”

Japan’s Nikkei closed up 0.53%, rebounding from a two-week closing low on Tuesday, while Hong Kong’s Hang Seng gained 0.83%, and Taiwan’s TAIEX rebounded from earlier losses to close 0.2% higher.

MSCI’s broadest index of Asia-Pacific shares rose 0.19%, helped by bargain-hunting in Japan after falling to a two-week closing low on Tuesday.

Australia’s AXJO shed 0.41%, while China’s blue-chip shares lost 0.13%.

FTSE futures were down 0.2%, and Euro Stoxx 50 futures were down 0.08% ahead of the European open.
US stock futures rose 0.32% after the S&P 500 lost 0.67% overnight.

Three Fed policymakers said on Tuesday they would not ease policy tightening aimed at containing the highest inflation since the 1980s, even though it would bring interest rates to levels that would significantly dampen economic activity.

Two of them, San Francisco Fed President Mary Daly and Chicago Fed President Charles Evans, are widely seen as dovish.

Traders now see a roughly 39.5% chance the Fed will raise rates by 75 basis points at its next meeting in September.
The benchmark US 10-year Treasury note yield in Tokyo was around 2.71%, not far from an overnight high of 2.774% after surging 14 basis points.

The US dollar index, which measures the greenback against the yen and five other major currencies, was down 0.188% at 106.25, rebounding as much as 1.43% overnight after falling to a near one-month low of 105.03.
Gold rose 0.57% to $1,769.73 an ounce after falling 0.68% in the previous session.