The market now prices in a 25 basis point rate cut by the Fed at the end of this month, after strong June U.S. jobs data tempered expectations of a deeper cut.
"It's unlikely the Fed would risk ignoring the markets signalling especially after taking a dovish turn at the June FOMC meeting which sparked a broad risk-on rally and overshadowed concerns about slowing (in) the US and global growth," Stephen Innes, managing partner at Vanguard Markets Pte Ltd, said in a note to clients.
Market participants also cheered the start of trade talks between U.S. and Chinese officials on Tuesday, marking a new round of negotiation after the world's two largest economies agreed to a truce in a year-long trade war.
Thai stocks rose the most in three weeks, helped by telecom and energy stocks. Oil explorer PTT PCL gained 1.1%, while Telecom services provider Advanced Info Service PCL rose 2.4%.
The coalition government plans to discuss economic stimulus measures to help offset the impact of a delay in the next state budget, a deputy prime minister said after market hours.
Singapore shares <.STI> closed higher for the first time in four sessions, propped up by buying in large caps like Singapore Telecommunications Ltd and United Overseas Bank Ltd.
Philippine stocks <.PSI> rose in low-volume trade, driven partly by a 3.2% gain in index heavyweight SM Investment Corp.
Indonesian shares <.JKSE> advanced, helped by financial and consumer stocks. Lender Bank Rakyat Indonesia (Persero) rose 1.4%, while conglomerate Astra International climbed about 2.4%.
Malaysian stocks <.KLSE> declined, dragged by losses in industrial and utility stocks.
(Reporting by Soumyajit Saha; Editing by Subhranshu Sahu)
By Soumyajit Saha
