Asian equities rose, helped by bargain hunting after concerns over a hard landing in the US drove a regional benchmark to its worst single-day drop since 2008.
The MSCI Asia Pacific Index jumped as much as 3.9%, heading for its best day since November 2022, following a rout of more than 6% on Monday. Japan led the rebound as the yen eased following steep gains against the dollar that drove the nation’s stocks into a bear market.
Regional equities came under the kosh in the previous two sessions as investors fretted over a possible US recession in addition to overheating of the artificial intelligence rally. Meanwhile, the rapid surge in the yen triggered unwinding of carry trades across the globe, weighing on technology stocks.
“The market reaction was a bit extreme yesterday and hence we see this sharp rebound today,” said Rupal Agarwal, Asia quantitative strategist at Sanford C. Bernstein. “I would expect markets to remain volatile and hence would stick to looking for late-cycle defensive exposure through quality or dividend yielding names.”
In addition to Japan, stocks bounced back Tuesday in technology-heavy South Korea and Taiwan. US equity futures also advanced, with sentiment boosted in part by a rise in the US July service purchasing managers’ index that helped allay some worry on the world’s largest economy.
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