Asian shares edged higher on Tuesday as a sharp U-turn in UK fiscal policy boosted investor sentiment, while the dollar took a breather at its lowest level in more than a week as a revival in risk-taking reduced its appeal.

Britain’s new finance minister, Jeremy Hunt, has abandoned much of Prime Minister Liz Truss’s economic plans that have sparked political turmoil as markets roiled and sterling has fallen to record lows in recent weeks; the Bank of England was forced to intervene.

Analysts at Morgan Stanley said the fiscal U-turn could have a big impact on the Bank of England, as its economists now raised their call for a rate hike at the November meeting to 75 basis points from 100 basis points. Hunter’s move sent UK government bonds, currencies and stocks soaring, boosting Wall Street.

Tapas Strickland, head of market economics at NAB, said it was still an open question how long Truss would stay in power, given that Prime Minister Truss’s Conservative leadership pledge had been scrapped on such a large scale.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.43%, while Japan’s Nikkei rose 0.6%. S&P 500 futures and Nasdaq futures both rose 0.8%.

Chinese stocks opened almost flat, up 0.12% to 3,088.54, as the country’s biannual national congress of the ruling Communist Party is still held this week.

Banking officials told Reuters on Monday that state-owned Chinese banks are stepping up their intervention to defend the yuan’s depreciation, while many companies have announced share buyback plans.

In currencies, the dollar retreated against most currencies overnight, with the pound tumbling in early trade on Tuesday after gaining 1.6% in the previous session.

The Australian dollar rose on Tuesday after the Reserve Bank of Australia said it expected further interest rate hikes in the coming months.

The yen hit a fresh 32-year low of 149.10 against the dollar on Monday, not far from a psychological indicator of 150. Investors have been watching for any signs of further Bank of Japan intervention, with authorities repeatedly warning of a firm response to the yen’s depreciation too quickly.

NAB’s Strickland said 150 was seen by many as a key threshold for the government hoping to avoid continued disruption for political reasons.

Meanwhile, China delayed the release of economic indicators, including third-quarter gross domestic product, on Tuesday and trade data on Friday. Brent crude gained 0.08% to $91.69 a barrel, while US crude gained 0.04% to $85.49 a barrel.