SYDNEY: Asian share markets were mostly firmer on Wednesday after Wall Street bounced and concerns about a U.S. recession were reassessed, though Japanese stocks took a dip as heightened volatility squeezed leveraged positions.
The Nikkei's drop of 0.6 per cent was relatively minor compared with Monday's 13 per cent dive and Tuesday's 10 per cent rally, leading to hopes investors were finding their footing.
"The sell-off in Japanese stocks may almost be over," said analysts at JPMorgan in a note. "Both nonresident and individual investors have reset their year-to-date net buying."
"If the market stays at its current level, the GPIF (government pension fund) could become a net buyer by end-September, and a view that unwinding of yen carry trades is almost over has also emerged."
The GPIF is a massive fund with considerable market power and its investment decisions are highly influential.
The unravelling of the yen carry trade - where investors borrow yen at low rates to buy higher yielding assets - was a driving force in the market rout, but again seemed to be stabilising.
The dollar edged up 0.2 per cent to 144.67 yen and away from the 141.675 trough hit on Monday, though it remains far below its July peak of 161.96.
The dollar also gained on the safe-haven Swiss franc to 0.8532, up from Monday's low of 0.8430.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.4 per cent, while Korean stocks added 0.8 per cent.
After bouncing overnight, Nasdaq futures eased 0.1 per cent in part due to a 12 per cent dive in AI darling Super Micro Computer after it missed earnings estimates.
S&P 500 futures steadied from an early drop, while EUROSTOXX 50 futures firmed 0.5 per cent. FTSE futures added 0.7 per cent, and DAX futures rose 0.3 per cent.
With safe-haven in less demand, Treasury yields ticked higher for a second session. U.S. 10-year yields were up at 3.908 per cent, and well off Monday's low of 3.667 per cent.
Two-year yields had climbed back to 3.997 per cent, from a deep trough of 3.654 per cent, as markets scaled back wagers on an intra-meeting emergency rate cut from the Federal Reserve.
Futures now imply 105 basis points of easing this year, compared with 125 basis points at one stage during Monday's turmoil, while a 50-basis-point cut in September seen as a 73 per cent chance.
Fears of an imminent U.S. recession had also faded a little as the run of economic data still pointed to solid economic growth in the current quarter.
The Atlanta Fed's much-watched GDPNow estimate is that gross domestic product is running at an annual pace of 2.9 per cent.
In commodity markets, gold prices were holding at US$$2,386 an ounce and short of last week's US$2,477 top.
Oil prices remained volatile as concerns about waning global demand warred with the risk of supply disruptions in the Middle East.
Brent slipped 18 cents to US$76.30 per barrel, while U.S. crude fell 26 cents to US$72.94 a barrel.