Stocks show some recovery after sharp declines

Tuesday saw a significant increase in most Asian stocks following a day of heavy losses; Japanese markets recovered the most after plunging into a bear market.

Regional markets also benefited from a portion of bargain purchasing, as investors flocked into deeply discounted stocks with solid fundamentals that would probably see a decrease in interest rates in the near future.

However, Asian stocks were still nursing significant losses from the previous day, which was brought on by mounting concerns of a U.S. recession following disappointing labour market data.

In overnight trading, Wall Street fell, and the NASDAQ Composite started to decline from its previous highs.

Nevertheless, Wall Street futures increased in Asian trade, suggesting that a recovery in US markets was also overdue.

Having dropped far more than their counterparts in recent sessions, Japanese stocks were by far the largest gainers on Tuesday. TOPIX surged 8.8%, while the Nikkei 225 index rose by more over 10%.

The previous session saw both indices plunge between 12% and 14%, yet they were still in bear market territory.

Although June's pay and spending figures were mixed, the Japanese markets recovered. Household expenditure decreased from a year ago, despite an increase in overall wages.

Japanese stocks were also helped by a decline in the yen, which came after the currency rose to its highest level in seven months.

The Bank of Japan's hawkish signals, which followed an interest rate hike and a warning of additional increases this year, damaged investor confidence in Japanese markets.

Chinese stocks underperformed, with the Shanghai Composite and Shanghai Shenzhen CSI 300 both marginally declining to levels close to six-month lows. The Hang Seng index for Hong Kong was just above a three-month low.

A series of disappointing economic indications and further stimulus left sentiment toward China uneasy.

This week's major trade and inflation data will be the focus for more economic clues.

(Sources: investing.com, reuters.com)