Chinese stocks soared on Wednesday, driving gains across Asian markets and extending a global rally fueled by stimulus efforts. The surge in equities also buoyed risk-sensitive currencies, while Brent crude hovered near a three-week high.

The U.S. dollar weakened after disappointing U.S. economic data raised expectations for a second large interest rate cut by the Federal Reserve. Meanwhile, gold reached a new all-time high.

Mainland China's blue-chip index (.CSI300) jumped 3.1% by 0230 GMT, following a 4.3% surge the previous session. Hong Kong's Hang Seng index (.HSI) rose 2.2%, adding to Tuesday's 4.1% gain. The rally in China provided a strong start for other regional markets, with Taiwan's benchmark index (.TWII) climbing 1.3% and South Korea's Kospi (.KS11) up 0.1%. MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose 1%.

Japan's Nikkei (.N225) overcame early losses to edge up 0.3%, helped by a weaker yen.

The People's Bank of China followed its broad policy easing measures on Tuesday by cutting medium-term lending rates on Wednesday. The stimulus, China's most significant since the pandemic, includes efforts to boost its stock market and support the struggling property sector.

UBS analysts noted that "the focus in Asia remains very much on China," but there is ongoing debate about the sustainability of the rally, with many investors buying first and analyzing later.

The yen fell 0.17% to 143.47 per dollar, while the euro inched up to $1.11915, reaching its highest level in a month. Sterling rose to $1.3417, hitting a fresh high since March 2022 at $1.3430 earlier in the day.

Overnight, U.S. data revealed a sharp drop in consumer confidence, falling to 98.7 from 105.6 in August, the largest decline since August 2021. The chance of a 50-basis point Federal Reserve rate cut in November increased to 60.4%, up from 53% the previous day.

Australia's dollar briefly touched a high not seen since February of last year before slipping back to $0.68915 after monthly inflation data indicated cooling, which could prompt the Reserve Bank of Australia to consider an earlier rate cut.

Gold rose 0.2% to $2,662.50 per ounce, hitting a new record high of $2,665.10 earlier in the day. Brent crude futures dipped 19 cents to $74.98 per barrel but remained near Tuesday's high of $75.87, the highest since early September. U.S. West Texas Intermediate crude fell 22 cents to $71.34 per barrel.