Japan leads Asian equity bounce, yields rise on trade optimism

Asian stocks bounced off 1-1/2-year lows and US stock futures pointed higher on Tuesday, as markets caught their breath after recent heavy selling on hopes that Washington might be willing to negotiate some of its aggressive tariffs.

US Treasury yields continued their ascent from six-month lows, gold hovered close to a 2-1/2-week low and crude oil recovered from a nearly four-year low, as traders began shifting back to riskier assets from traditional safe havens.

A 5.6 percent rebound in Japan's Nikkei far outpaced other regional markets, with Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer tasked with leading trade negotiations with Tokyo.

US business leaders have also begun speaking out about the damage to the economy and financial markets that could be wrought by President Donald Trump's global trade war, with JPMorgan Chase chief executive Jamie Dimon warning on Monday of inflation and a US slowdown.

"Importantly, a little ray of sunshine is starting to emerge that gives hope that the US is genuinely open to trade negotiations, ... 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 as high as 60 overnight.

South Korea's KOSPI added 1.3 percent and Australia's equity benchmark gained 1 percent.

Pan-European STOXX 50 futures rallied 2.2 percent.

US S&P 500 futures rose 0.9 percent, after the cash index ended a wild session with a 0.2 percent loss on Monday.

REUTERS