Major Asian Markets Rebound After Sharp SelloffUpdate

By Kosaku Narioka

Major Asian stock markets rebounded Tuesday morning, with Japan leading gains, following a sharp selloff caused by fears around U.S. tariffs.

Japan's Nikkei Stock Average was recently 6.1% higher on Tuesday, recovering after recording its lowest close since October 2023 on Monday as hopes grow for progress in U.S. tariff talks.

Electronics, financial and auto stocks led gains in Tokyo, with Nippon Steel up 8.3% after President Trump ordered a new national security review of the company's plan to acquire U.S. Steel.

Hong Kong's Hang Seng Index rose 1.4%, one day after posting the biggest daily percentage drop since the 1997 Asian financial crisis. In China, the Shanghai Composite Index was 0.5% higher.

Treasury Secretary Scott Bessent said Japan is likely to be prioritized in trade talks with the Trump administration and that he would lead negotiations with Japanese Prime Minister Shigeru Ishiba. Japan is a close ally of the U.S. and the largest foreign owner of U.S. government bonds.

Chinese stocks rose modestly as state-owned investment firms boosted their holdings of domestic equities. The nation's central bank also pledged to firmly support Central Huijin, one of the investment firms.

Focus is on more tit-for-tat countermeasures after Beijing threatened to retaliate further against the U.S. if Trump carries out his threat to raise the tariff on Chinese goods by an additional 50%.

The Chinese central bank loosened its grip on the yuan by weakening its daily reference rate past the key threshold of 7.20 for the first time since September 2023.

Many Asian currencies strengthened against the U.S. dollar on hopes for trade negotiations. Market focus is shifting toward possible trade talks, which could offer some respite for currencies this session, DBS Group Research's Philip Wee said in a commentary.

South Korea's Kospi was up 0.7%, Australia's S&P/ASX 200 rose 1.4% and Malaysia's benchmark Kuala Lumpur Composite Index added 0.2%.

Not all markets joined the upward momentum, with indexes in Taiwan and Indonesia sharply lower in a reflection of continued uncertainty over the tariffs saga.

Taiwan's Taiex was down 5.0%, with iPhone-assembler Foxconn Technology Group falling 9.7% and chip giant Taiwan Semiconductor Manufacturing Co. dropping 4.5%.

Indonesia's Jakarta Composite Index was down 8.7%, tumbling on the first day of trading after a holiday break, with the rupiah weakening to a new low against the dollar.

Vietnam's VN index was 5.3% lower and Singapore's FTSE Straits Times Index was down 1.5%.

"It remains to be seen when the equities selloff will eventually end," Singapore-based UOB analysts said in commentary. "U.S. President Trump seemed determined to follow through with his extreme tariff policy."

Write to Kosaku Narioka at kosaku.narioka@wsj.com