Sydney — Asian shares rallied for a third session on Tuesday, as hope for upbeat corporate earnings buoyed Wall Street.

In currency markets, several high-profile resignations from Britain’s government kept sterling on the defensive.

MSCI’s broadest index of Asia-Pacific shares outside Japan put on 0.4% in early trade, adding to a 1.3% rise on Monday.

Japan’s Nikkei climbed about 1% and South Korea’s Kospi was up 0.5%, while E-mini futures for the S&P 500 firmed 0.2%.

Chinese shares were a bit soft with Shanghai blue chips off 0.2% after climbing 2.8% on Monday — their biggest daily jump since August 2016.

Both the Dow Jones industrial average and the S&P 500 boasted their biggest gains in more than a month overnight, as bank shares jumped ahead of earnings reports later this week.

The S&P banks index posted its sharpest rise since March 26.

The Dow rose 1.31%, while the S&P 500 gained 0.88% and the Nasdaq 0.88%.

"Many investors are looking ahead to second-quarter earnings season, which begins in earnest on Friday … to see how the trade threat is affecting companies," said James McGlew, Perth-based analyst at stockbroking firm Argonaut.

Investors have been on edge recently with the US and China slapping levies on each other’s exports, spurring fears of a global growth slowdown and hurting stocks and commodities.

The story in currency markets was all about political capers in London.

Prime Minister Theresa May’s foreign minister and Brexit negotiator quit on Monday in protest against her plans to keep close trade ties with the European Union after Britain leaves the bloc, stirring rebellion in her party’s ranks.

Foreign secretary Boris Johnson stepped down just hours after David Davis’s resignation as Brexit secretary, emboldening some in her Conservative Party to mull a plot to unseat her.

The uncertainty led sterling to sink as deep as $1.3189 at one stage before rebounding somewhat to $1.3254. It was last down 0.1% at $1.3248.

Markets still think it likely the Bank of England will increase rates in August, but a full-blown political crisis could change that.

"Heightened political risk at home coupled with Brexit uncertainty may prompt the Bank of England to repeatedly delay monetary policy normalisation in 2018," said Lukman Otunuga, a research analyst at broker FXTM.

"If expectations continue to diminish over the central bank raising UK interest rates, sterling is at risk of experiencing heavy losses down the road."

The pound’s pain was a boon for the dollar, which rallied broadly on expectation the Federal Reserve will keep raising interest rates.

Against a basket of currencies, the dollar bounced to 94.083 from a low of 93.713. The dollar also edged up to ¥111.01, from a trough of ¥110.30.

The euro was back at $1.1755, having run into profit-taking at a three-week peak of $1.1790 overnight.

In commodity markets, oil gained on supply disruptions in Canada and Libya, and ahead of looming sanctions on Iran.

US crude added 14c to $73.99, while Brent rose 23c to $78.30 a barrel.

Spot gold was a fraction firmer at $1,259.02.