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Asian stocks rebounded on Monday, as global equities continued to recover from a recent sell-off, triggered by investors’ concerns over the outlook for high interest rates and inflation.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up by 0.4 percent to $579.14, regaining over 40 percent of its losses from late last month to prior week’s low.

Japan’s Nikkei 225 gained 1.9 percent to ¥22,149.21, while the TOPIX index added 2.1 percent to ¥1,775.15, trading 4.5 percent higher from its four-month decline on February 14.

TOPIX gained its most in six weeks, as the rally in the yen cools down and after shares in the US marked their highest in five years.

Dow Jones Industrial Average (DJI), S&P 500, and the NASDAQ composite index each gained more than 4 percent on Friday.  

The Dow closed 0.08 percent higher to $25,219.38, while S&P 500 was up 0.04 percent to $2,732.22. NASDAQ composite ended its five consecutive days of gains after losing 0.2 percent to $7,239.46.   

A securities firm said that Japanese stocks this week are likely to test a rebound from sharp losses earlier in the month.

The company added that seeing the weakening volatility in both Japan and the US, they can expect a calm market.

Trading is expected to be more sluggish than usual, as markets in Greater China remain closed for the Lunar New Year holiday and in the US for President’s Day. Markets in Taiwan, Vietnam, and Canada are also closed for the day.

The Hong Kong market will reopen on Tuesday, while Chinese markets resume trading on Thursday.  

Shares in Sydney were also optimistic, with the S&P/ASX 200 raising 0.6 percent to A$5,941.60. Significant gains helped bolster the index to its highest close in two weeks, following an improvement by most of Australia’s major banks and a strong corporate earnings period.    

South Korea’s KOSPI climbed a near two-week high of 0.8 percent to ₩2,442.82.

Chief strategist Takashi Hiroki described the gains in Asia as kind of a relief rally.

The rebound in Asian shares was the latest signs of rising confidence in global equities, following a correction earlier in the month. Investors are now turning their focus back on strong earnings.  

Global Equities Experience Most Dreadful Sell-off in Two Years

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Global equities recovered last week after a major sell-off that took out more than 10 percent of value at one time, as investors grew worried about higher inflation and borrowing costs, as well as the US 10-year Treasuries yield reached nearly 3 percent.

The US 10-year Treasuries yield marked its 4-year high of 2.9 percent last week, compared to the 2.4 percent at the end of 2017.

The 2-year Treasuries yield rose to its highest level since 2008 in the previous week, as investors widely hope for the Federal Reserve to raise interest rates in its next policy meeting in March this year.

In the week ahead, investors will shift focus on minutes of the Fed’s January 30-31 meeting. They expect the central bank to provide more signs with regards to the time of future rate hikes this year.

Additionally, markets will also be looking forward to see what if anything the Fed makes of the gyrations in markets.

The Reserve Bank of Australia (RBA) is also set to present minutes of its February meeting on Tuesday.

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