SYDNEY/SINGAPORE- Japanese stocks jumped at the open on Tuesday, underpinning a recovery across battered Asian share markets, after central bank officials said all the right things to soothe investor nerves.
The Nikkei soared more than 10 percent to above 34,500, rebounding sharply from its 31,458 close on Monday. The index had plummeted 12.4 percent in the previous session in its worst sell-off since the 1987 Black Monday crash.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 2.0 percent .
Wall Street also looked steadier with S&P 500 futures rebounding 1.5 percent , while Nasdaq futures rose 2 percent and the pan-region Euro Stoxx 50 futures advanced 1.24 percent .
The S&P 500 had lost 3.00 percent on Monday, with the Nasdaq Composite slumping 3.43 percent , extending a recent sell-off as fears of a possible US recession spooked global markets.
Yields on 10-year Treasury notes were back at 3.84 percent , having been as low as 3.667 percent at one stage.
Federal Reserve officials did their best to reassure markets with Fed San Francisco President Mary Daly saying it was “extremely important” to prevent the labor market tipping into a downturn. Daly said her mind was open to cutting interest rates as necessary and policy needed to be proactive.
“The Nikkei’s enjoying a decent retracement against Monday’s plunge, as comments from the Fed’s Daly and a stronger-than-expected ISM services report soothed fears of a panic Fed cut next week,” said Matt Simpson, a senior market analyst at City Index in Brisbane.
“But this is not exactly a risk-on rally. And we are not yet sure if this is just a breather between water-boardings or there is more pain to follow.”
Currencies also seemed to be reversing some of Monday’s sharp moves, as the dollar edged up to 145.64 yen having sunk 1.5 percent on Monday to as deep as 141.675. The yen has shot higher in recent sessions as investors were squeezed out of carry trades, where they borrowed yen at low rates to buy higher yielding assets.
