Asian markets rebound, led by Nikkei’s big gain

Asian markets rebound, led by Nikkei’s big gain

Stocks jump about 3% in Japan after Monday’s selloff

TOKYO — Asian shares rebounded from their retreat a day earlier, tracking Wall Street’s recovery from the Federal Reserve’s reminder it will eventually provide less support to markets.

Japan’s benchmark Nikkei 225 NIK, +3.12% jumped 3% in morning trading. Australia’s S&P/ASX 200 XJO, +1.48% added 1.5% and South Korea’s Kospi 180721, +0.71% rose 0.7%. Hong Kong’s Hang Seng HSI, -0.63% edged up 0.1%, while the Shanghai Composite SHCOMP, +0.80% gained 0.8%. Stocks slipped in Singapore STI, -0.17%, but advanced in Taiwan Y9999, +0.07% and Indonesia JAKIDX, +1.53%.

Although the latest bout of jitters over a possible easing of help from the Federal Reserve and other central banks appears to have passed, analysts said rising coronavirus cases in the region remained a concern.

“Much of the region is dealing with renewed waves of COVID-19 infections. These waves, especially in the case of India, Indonesia and some other countries in Southeast Asia, are the most severe yet,” said Venkateswaran Lavanya at Mizuho Bank in Singapore.

On Monday, the S&P 500 SPX, +1.40% snapped 1.4% higher, to 4,224.79, recovering nearly three-quarters of its worst weekly loss since February. Oil producers, banks and other companies that were hit particularly hard last week led the way.

The Dow Jones Industrial Average DJIA, +1.76% gained 1.8% to 33,876.97 and the Nasdaq composite COMP, +0.79% rose 0.8%, to 14,141.48.

Investors are still figuring all the ramifications of the Fed’s forecast that may start raising short-term interest rates by late 2023. That’s earlier than previously thought. The Fed also began talks about slowing programs meant to keep longer-term rates low, an acknowledgment of the strengthening economy and threat of higher inflation.

The market’s immediate reaction to last week’s Fed news was to send stocks lower and interest rates higher. Higher rates would make stock prices, which have been climbing faster than corporate profits, look even more expensive than they do already.

But it’s not like the Fed said it will hike rates from their record low of nearly zero anytime soon.

“If markets are worried about a march back to more normal monetary and fiscal policy as the economy recovers, it will be a very long march,” Barings chief global strategist Christopher Smart said in a note. In the meantime, support from both the Federal Reserve and the U.S. government should continue to help stock prices, even if they do look expensive compared with history, he said.

In energy trading, benchmark U.S. crude CLN21, -0.54% picked up 13 cents to $73.25 a barrel in electronic trading on the New York Mercantile Exchange. It jumped $1.83 to $73.12 on Monday. Brent crude BRNQ21, -0.21%, the international standard, gained 23 cents to $75.13 a barrel.

In currency trading, the U.S. dollar USDJPY, 0.12% rose to 110.39 Japanese yen from 110.31 yen.

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