The miracle on Wall Street has lifted much of the gloom in Asian markets.
Japan’s Nikkei jumped nearly 4% on Thursday, pulling the index out of the bear market it had entered just two days ago. Stocks were also up more than 1.5% in Australia and Singapore.
But some markets failed to hold onto their gains, underscoring the fragile mood among investors. Hong Kong’s Hang Seng and China’s Shanghai Composite both slipped into negative territory in afternoon trading after rising around 1% earlier in the day. US stock futures were also pointing lower.
The major US indexes staged a miraculous comeback Wednesday following their worst ever Christmas Eve. The Dow, S&P 500 and Nasdaq all leaped 5% or more.
Wall Street’s remarkable rebound is “a welcome breath of fresh air to Asia investors,” said Stephen Innes, head of Asia-Pacific trading at online broker Oanda.
“This recovery should put to rest the feverish fear-mongering that had investors believing the investment world as we know it is coming to an end,” he added.
Wednesday’s stunning surge in crude oil prices helped boost energy industry stocks in Asia.
In Tokyo, oil refiner Showa Shell Sekiyu spiked 8% Thursday. Engineering and energy exploration company Chiyoda Corp. soared 10%.
But experts are still urging caution despite the dizzying rebounds in some markets.
The sustainability of the US rally remains “questionable” because of “concerns over economic growth next year and … many political and economic uncertainties” such as the US-China trade war, CMC Markets analyst Margaret Yang wrote in a commentary Thursday.
Similar doubts are weighing on Asian markets too, said Yang, who is based in Singapore.
Investors were given a stark reminder of China’s economic slowdown on Thursday, with official data showing a year-on-year drop in industrial profits in November — the first in nearly three years.
“China economic growth in my books remains to be the most significant market risk as we enter 2019,” Innes said.
More volatility likely
Global markets had plunged earlier in the week amid unsettling signals from Washington that made traders fret about the stewardship of the world’s biggest economy.
They included President Donald Trump’s attacks on Federal Reserve Chairman Jerome Powell, the partial shutdown of the US government and Treasury Secretary Steven Mnuchin’s unusual statement about the country’s banks.
Investors shouldn’t rule out more volatility in the days ahead, according to Innes.
“Don’t get too comfortable, as discussions regarding the various political and policy questions remain hanging in the balance,” he said.
