Asian markets yesterday tracked overnight gains on Wall Street, recovering from a mixed session on Monday.
A strong earnings season on Wall Street has been a bright spot for markets, which have been muffled as trade tensions between the United States and China dragged on.
Oil prices continued to rise on the back of reports that Saudi Arabia had lowered its output. Moreover, the US reimposed sanctions on Iran following President Donald Trump's decision in May to exit a multi-nation nuclear deal with Iran.
FXTM research analyst Lukman Otunuga said in a report: "This unfavourable development comes at a time where escalating US-China trade tensions continue to weigh on investor confidence and global risk sentiment."
Monday's losses on the Nikkei 225, Kospi and Shanghai Composite were followed by gains yesterday. The Hang Seng and Kuala Lumpur Composite continued in positive territory.
But the ASX 200 closed lower, dragged down by financials and mining firms Rio Tinto and BHP.
Among Asian indexes, the Shanghai Composite, which fell over 5 per cent across the last four trading sessions, was the biggest gainer, closing 2.7 per cent higher with its biggest gain in two years.
The benchmark Straits Times Index gained 1.66 per cent or 54.66 points to 3,340, its biggest intra-day jump since April.
Turnover stood at about 1.99 billion shares worth $1.37 billion. Gainers outnumbered losers 249 to 158.
Gains on the STI were led by the three big banks.
OCBC Bank closed 47 cents or 4.1 per cent up at $12.05.
DBS shares closed 39 cents or 1.5 per cent up at $26.79, and UOB finished 89 cents or 3.3 per cent higher at $28.02.
On a turnover of 46.5 million shares, Genting Singapore remained the most hotly traded stock for a second straight session.
It dropped one cent or 0.9 per cent to $1.12, also making it the biggest loser among index stocks.
With the release of China's July trade balance today, the resilience of the yuan is set to be tested.
CMC Markets analyst Margaret Yang said: "Stronger than expected readings are likely to dampen the bearish bets on yuan following an eye-watering 6 per cent depreciation of the currency over the last two months, which might provide support to the country's exports and offset some of the impact of US tariffs."