Rebound in Japan provides some respite for battered markets #JapanFinance

By Kevin Buckland

TOKYO (Reuters) -Asian stocks bounced off more than one-year lows and U.S. stock futures pointed up on Tuesday, but many investors remained on edge even as they hoped Washington might be willing to negotiate some of the aggressive tariffs that have unleashed turmoil in markets.

A 5.6% rebound in Japan’s Nikkei far outpaced other regional markets, with Treasury Secretary Scott Bessent tasked with leading trade negotiations with Tokyo.

“Importantly, a little ray of sunshine is starting to emerge that gives hope that the U.S. is genuinely open to trade negotiations, (with) the most significant being Japan with Treasury Secretary Bessent,” said Tapas Strickland, head of market economics at National Australia Bank.

Strickland, however, noted volatility remains extremely elevated, with the “rare event” of the VIX index spiking above 60 overnight for only the second time since the pandemic.

Indeed, the uptick in Tokyo comes after a steep selloff in recent days, while China’s markets rose only modestly after the country’s sovereign wealth funds stepped in to buy shares. Chip-export-dependent Taiwan’s benchmark tumbled 5%, a day after suffering its worst fall on record.

MSCI’s broadest index of Asia-Pacific shares added 1.7% to climb from its lowest level since February of 2024, but that followed a more than 10% dive over the previous two sessions, and much of the rebound came from Japanese shares.

Thai stocks dropped nearly 6% in catch-up selling from a holiday on Monday, while Indonesia returned from a week-long holiday to 9% losses.

Hong Kong’s Hang Seng climbed 1.6% after its steepest drop since the 1997 Asian financial crisis on Monday. Mainland Chinese blue chips added 1%, with help from buying by sovereign fund Central Huijin Investment and other state-backed investors.

The Chinese yuan fell to 7.3677 per dollar in the offshore market, the weakest in two months, before rebounding to be slightly stronger than Monday’s close at 7.3393.

The heightened uncertainty in markets wasn’t helped by shifting headlines on trade as investors looked for respite from the sharp market volatility.

An erroneous report by CNBC that President Donald Trump was considering a 90-day pause on tariffs for countries other than China was quickly denied by the White House.

Trump also dug in his heels over China, vowing additional 50% levies if Beijing does not withdraw retaliatory tariffs on the United States. Beijing said on Tuesday it will never accept the “blackmail nature” of U.S. tariff threats.