MSCI’s broadest index of Asia-Pacific shares outside Japan was up about 0.9 percent and away from eight-week lows. Australian shares jumped 1.5 percent while Japan’s Nikkei pulled out of bear market territory it had entered on Tuesday, surging 3.7 percent.
Asian shares on Thursday latched on to a dramatic surge on Wall Street as markets, battered by a recent drum roll of deepening political and economic gloom, cheered upbeat US data and the Trump administration’s effort to shore up investor confidence.
In a buying frenzy that was as spectacular as the recent rout, US stocks soared with the Dow Jones Industrial Average rocketing more than 1,000 points for the first time on Wednesday.
That helped push MSCI’s broadest index of Asia-Pacific shares outside Japan up about 0.9 percent and away from eight-week lows.
Australian shares jumped 1.5 percent as trading resumed after the Christmas break, while Japan’s Nikkei pulled out of bear market territory it had entered on Tuesday, surging 3.7 percent in mid-morning trading.
There was no single trigger for the overnight relief rally on Wall Street, though a Mastercard Inc report that sales during the US holiday shopping season rose the most in six years in 2018 helped clam frayed nerves.
There was also some attempts by the White House to temper its broadside against the Federal Reserve. Kevin Hassett, chairman of the White House Council of Economic Advisers, said on Wednesday that Fed Chairman Jerome Powell’s job was not in jeopardy.
His comments came just days after President Donald Trump described the Fed as the “only problem” to the U.S. economy after the central bank last week raised rates for the fourth time this year, and retained plans for more hikes in 2019.
A US government shutdown, concerns over slower global growth and US Treasury Secretary Steven Mnuchin convening a crisis group following the sharp sell-off in equities have also rattled investors.
Faced with deepening gloom, investors were quick to latch on to media reports that a US trade team will travel to Beijing the week of January 7 to hold talks with Chinese officials.
“Investors are aware of negative factors, but they aren’t paying attention to those. They are looking at the Dow’s $1,000 gain...Short-covering will likely be a major theme today,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
“I think worries regarding the US government shutdown as well as lack of clarity over whether the US-Sino negotiations (over trade) will go well or not still remain,” he said.
After the overnight rally, E-Mini futures for the S&P 500 were last down nearly half a percent.
