Asian stocks pulled further away from two-month lows on Tuesday, lifted by Wall Street’s extended rebound from last week’s steep fall, but investors remained cautious ahead of US inflation data later in the week.
Spreadbetters expected a higher open for European equities, forecasting 0.25 per cent gains for Britain’s FTSE and 0.3 per cent for Germany’s DAX and France’s CAC.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 1.1 per cent after sliding to its lowest level since Dec 11 on Friday.
Australian stocks rose 0.6 per cent and South Korea’s KOSPI climbed 0.65 per cent. Japan’s Nikkei started higher but lost steam to slip 0.75 per cent.
The Shanghai Composite Index was 1 per cent higher, buoyed by global gains and suggestions of possible Chinese government support.
An affiliate of China’s securities regulator on Monday encouraged major shareholders of domestically-listed firms to increase their holdings after last week’s global selloff mauled Chinese stocks.
Wall Street’s three major indexes rose for the second day on Monday as investors regained some confidence after US equities had their biggest weekly drop in two years.
Still, caution lingered in the broader markets following the US-led tumble in riskier assets last week and ahead of US inflation data on Wednesday. A stronger-than-expected reading on price pressures could trigger a fresh wave of selling.
“It is hard at this stage to tell if the US markets have bottomed out, considering that bets against the dollar still remain significant,” said Kota Hirayama, senior emerging markets economist at SMBC Nikko Securities in Tokyo.
“On the other hand, attempts by investors to pull money out of the emerging markets during last week’s turmoil appeared to have been unexpectedly limited, so that is an encouraging sign.”
Wednesday’s US inflation data will be watched closely by jittery markets, reports Reuters.
“The consumer prices numbers bear close watching as if it shows a strong rise, that could rattle US long-term yields and impact equities negatively,” said Koji Fukaya, president of FPG Securities in Tokyo.
The 10-year Treasury note yield edged back to 2.849 per cent after rising to a four-year peak of 2.902 per cent on Monday.