Hong Kong stocks rally over 6% in sixth straight day of gains

• Traders in Asia assessed data on consumer inflation out of South Korea.
• Oil prices and the CBOE Volatility Index (.VIX) jumped overnight as Iran fired ballistic missiles at Israel.

SINGAPORE — Hong Kong's Hang Seng index was up over 6% on Wednesday, hitting a 22-month high for a sixth day of gains amid further optimism about Beijing's latest stimulus policies.

The index closed up 6.2%, ending at 21,133.68, its highest since January 2023. The market resumed trading on Wednesday after a holiday on Tuesday.

Property developers fueled much of the gains, with China Vanke, Logan Group, and Longfor Group leading, up as much as 61%, 30% and 24%, respectively.

Major cities in mainland China introduced some easing measures to enhance homebuyer confidence over the weekend. Chinese tech giants also rallied, with Meituan, Baidu and JD.com all up over 9%.

Markets in mainland China were closed Wednesday and will remain so for the rest of the week due to the Golden Week holiday. Chinese stocks had rallied Monday to their best day in 16 years after Beijing announced a raft of stimulus measures last week, including interest-rate cuts, cutting reserve requirements for banks and providing more liquidity to investors.

Speaking to CNBC's "Street Signs Asia" James Sullivan of JPMorgan said he was remaining "cautious" about the big market rally in China due the stimulus measures so far focusing on supply and investment rather than consumption.

"The million dollar question in China right now is, does [the stimulus] only flow into the supply side of the equation, or does it ultimately flow through into consumer demand? That's not our expectation right now," Sullivan said.

Overall, Asia-Pacific markets were mixed Wednesday morning, following a poor start to the trading month on Wall Street that saw major indexes fall amid rising Middle East tensions.

Australia's S&P/ASX 200 closed down 0.13% to 8,198.2. South Korea's Kospi fell 1.22% to end at 2,561.69, while the small-cap Kosdaq slipped 0.23% to 762.13. Japan's Nikkei 225 fell 2.18% to end at 37,808.76, while the Topix dropped 1.44% to 2,651.96.

Japan reacts to new Prime Minister

On Tuesday, new Japanese Prime Minister Shigeru Ishiba took office following his election as head of the country's ruling Liberal Democratic Party last week. He succeeded Prime Minister Fumio Kishida who formally stepped down earlier in the day.

Ishiba's ascension could give the Bank of Japan more scope to raise interest rates further, according to some analysts. Stocks in Japan fell Monday as investors digested the news, before rebounding slightly on Tuesday.

However, newly appointed economy minister Ryosei Akazawa said Wednesday that Ishiba expects the central bank to cautiously evaluate the economy before hiking rates again, according to Reuters.

"Our top priority is to ensure that Japan completely exit from deflation," Akazawa told reporters, adding that it would take some time. While Ishiba has previously commented on the need for monetary policy normalization, Akazawa said those statements "have various conditions attached."

In individual stocks news, Mitsubishi Motor was up 4.6% after Mitsubishi Motors North America reported a 22.1% increase in year-to-date sales compared to the same period last year. Mitsubishi Electric rose 1%.

South Korea data

Traders in Asia were assessing data on consumer inflation out of South Korea. The country's consumer price index rose 1.6% in September from a year earlier, data showed Wednesday morning, cooler than expected by economists polled by Reuters who expected a rate of 1.9%. The figure was up by 0.1% on a monthly basis, less than the gains of 0.4% in the previous month and the 0.3% expected by economists.

According to a survey from S&P Global released Wednesday, South Korea's factory activity contracted at its fastest pace in 15 months in September as overseas demand slowed for the first time this year. The purchasing managers' index for manufacturers stood at 48.3 in September, down from 51.9 a month prior.

Middle East tensions

In the U.S. overnight, the Dow Jones Industrial Average fell more than 173 points, while the S&P 500 and Nasdaq Composite dropped 0.93% and 1.53%, respectively. Oil prices and the CBOE Volatility Index (.VIX) jumped as Iran fired ballistic missiles at Israel.

The attack followed Israel's start of a ground operation into Lebanon as tensions escalated with Iran-backed militant group Hezbollah.

Israeli Prime Minister Benjamin Netanyahu said Iran's missile attacks had failed and vowed retaliation. "Iran made a big mistake tonight — and it will pay for it," he said, according to NBC News, adding "the regime in Iran does not understand our determination to defend ourselves and our determination to retaliate against our enemies."

Speaking to CNBC's "Squawk Box Asia" on Wednesday, economist Stephen Roach warned that the Middle East conflict poses upside risk to oil prices and inflation. He also said the U.S. Federal Reserve may need to reconsider furthering its accommodative monetary policy. 

Meanwhile, U.S. investors are looking ahead to the September jobs report that will be released on Friday. The U.S. economy created slightly fewer jobs than expected in August, reflecting a slowing labor market. 

"If we're going to have a regional conflict in the Middle East, which certainly appears to be the case, occurring at a time of rising unemployment in the United States, the markets really will not know where to turn," Roach said, adding that such a scenario could create dramatic volatility in markets.

—CNBC's Brian Evans and Alex Harring contributed to this report.