Asian stocks edged higher for a third consecutive day on Wednesday as investors focused on strong corporate earnings and the dollar gave back some of its recent gains after a rise in political tensions.

US President Donald Trump's abrupt dismissal of FBI Director James Comey prompted some unwinding of risky bets in early Asian trading but strategists said investors were cheered by a strong slate of corporate earnings, reflecting the cyclical rebound in the first quarter of 2017 was still in place.

“Markets are setting aside the many policy changes seen from the Trump administration and focusing on the improvement in corporate performance and that should support sentiment,” said Tai Hui, chief Asia market strategist at JPMorgan Asset Management in Hong Kong.

With results in for the majority of the companies on the S&P 500, estimated Q1 earnings growth is now at 14.5 per cent, highest since Q3 of 2011, Thomson Reuters data shows with roughly 75 per cent of companies are beating analysts' expectations.

That has helped Asia as well, with 12-month forward earnings per share for the MSCI index of Asia-Pacific shares outside Japan rising to its highest level in more than three years.

“Strong corporate earnings are supporting risk sentiment in the Asian equity markets, said Fan Cheuk Wan, head of investment strategy and advisory at HSBC Private Banking.

MSCI's Asia ex Japan index was flat after posting modest gains in the previous session. It hit a two-year high last week.

Korean stocks led losers as investors took profits after South Korea's liberal leader Moon Jae-in was elected president while losses in Australia's big banks weighed on the broader market after the government levied taxes on the lenders to help balance the budget. and

Markets were also relieved when US Commerce Secretary Wilbur Ross signalled the Trump administration would attempt to use existing tools to aggressively enforce trade rules and insist on fairer treatment for US goods, rather than adopt the slash-and-burn approach Trump promoted on the campaign trail in 2016.

In currencies, the dollar index, which tracks the greenback against a basket of six major currencies, slipped 0.2 per cent to 99.424, moving away from a three-week high of 99.688.

Rising US yields propped up the dollar to its strongest level against the Japanese yen in two months at 114.32 in the previous session but it gave back some of those gains after Trump fired FBI Director Comey in a move that shocked Washington.

It was last changing hands at 113.76 per dollar, while yields on benchmark 10-year US Treasury notes were lurking near their highest levels since end-March at 2.39 per cent.

But some market analysts pointed out with market volatility indicators hitting record lows -- the VIX indicator fell overnight to 9.56, its lowest since late 2006 -- the likelihood of a large move in financial markets has grown.

“Geopolitics and the divergence of policy have not gone away,” Marc Chandler, global head of FX strategy wrote in a daily note.

“It is a reminder that we are often lulled into complacency just before being shocked by how treacherous things really are.”

Fed funds futures pricing showed investors almost universally expect the Federal Reserve to raise US overnight interest rates at its next meeting, with close to a 90 percent perceived chance of an increase next month.

Brent crude futures rose more than 0.5 per cent to $49.03 per barrel after Reuters reported Saudi Arabia would cut supplies to the Asia region to maintain supply to meet rising domestic demand for power during the summer months.

OPEC is battling against rising US output that is threatening to derail its attempts to end a sustained global glut in crude.

Gold advanced modestly to $1221.90 ounce, breaking a two-week long losing streak.

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