Asian equities rallied Tuesday after the previous day’s global rout fueled by U.S. recession fears that have led to calls for the Federal Reserve to cut interest rates before its next meeting.
Tokyo, which suffered a record loss Monday, soared more than 10% at one point as traders rushed back to pick up beaten-down stocks caught up in a catastrophic day for markets in which trading boards were a sea of red.
Analysts warned that there would likely be more volatility to come.
The sell-off came on the back of data Friday revealing a surprisingly low number of U.S. jobs were created last month, and another report showing continuing weakness in the manufacturing sector.
That led to warnings that the Fed had kept rates at more than two-decade highs for too long and was at risk of tipping the economy into recession.
Some analysts pointed to the “Sahm Rule,” which says an economy is in the early stages of recession if the three-month moving average of unemployment is 0.5 percentage points above its low over the previous 12 months. That was triggered by Friday’s data.
While Wall Street’s three main indexes suffered another day of pain — with the Nasdaq down more than 3% — a forecast-beating read on the key U.S. services sector provided a little solace for investors.
Tokyo’s Nikkei, which tanked more than 12% Monday and suffered a record points loss, jumped around 10.5% in the morning before paring some of those gains.
Toyota was up more than 10%, Sony piled on more than 7%, while chip giant Tokyo Electron added 12.26%.
