Global shares extended their recovery on Tuesday, with Asian markets bouncing from four-weeks lows as investor focus on economic growth partly offset worries about any near-term rise in U.S. interest rates.
The early momentum in the region was supported by a rally on Wall Street, with the Dow registering its strongest session in more than three months.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.35%, moving above Monday’s four-week lows and notching a 4% gain so far this year.
Japanese shares led the way, with the Nikkei advancing 2.1%. South Korea stocks rose 0.4%, Australia was up 1.2% and Chinese stocks advanced 0.6%
Last week’s surprise hawkish shift by the U.S. Federal Reserve sent global stock markets skidding as traders brought forward expectations for interest rate increases.
The Fed’s pivot toward starting policy normalisation discussions was driven by rapidly rising inflation, a dynamic that has kept financial markets on edge in the past few months.
“We view the meeting as an initial step of a shift in Fed rhetoric as the central bank continues to catch up with stronger than expected growth and inflation indicators, and the Fed’s inflation forecasts remain well below our projections,” JPMorgan strategists said in a note.