In Asian trading, the Shanghai Composite closed 1.3% higher, far from erasing an 8% plunge a day earlier as the People's Bank of China reportedly put another $57 billion in extra funds into the markets.
The gambling enclave of Macau announced Tuesday that it was asking its casinos to close for two weeks, as another two Chinese cities imposed restrictions to help contain the spread of a virus that has killed more than 400 people and infected more than 20,000.
The communist party newspaper People's Daily said in a tweet that another 400 billion yuan ($57 billion) in funds went into the markets following the People's Bank of China's injection of a net 150 billion yuan ($21 billion) on Monday.
The central bank announced in advance that it would put 2 trillion yuan ($173 billion) into the market through reverse repurchases of securities on Monday when the markets reopened after a 10-day break that was prolonged to help reduce risks of further spreading the virus. The lion's share of that money went to cover maturities falling due.
Chinese leader Xi Jinping has declared the crisis the country's biggest priority, awhile tens of millions of people remain in lockdown as a precaution against contagion. “Extra liquidity courtesy of Chinese central bankers, instructions from authorities ‘not to panic' and perhaps some state-backed institutional buying seems to have done the trick," Jasper Lawler of LCG said in a commentary.
“Authorities can’t prop up markets indefinitely but traders for now are taking the cue to buy the dip," Lawler said. In other Asian markets, Japan's Nikkei 225 index gained 0.5% to 23,084.59, while the Kospi in South Korea jumped 1.8% to 2,157.90. Australia's S&P ASX/200 rose 0.4% to 6,948.70, while the Hang Seng in Hong Kong climbed 1.2% to 26,675.98. The Shanghai Composite jumped 1.3% to 2,783.29. Taiwan's benchmark surged 1.8% and the Sensex in India gained 2.3%.
Overnight, U.S. stocks had recovered some of their losses from earlier weeks, though a warning signal of recession in the bond market was still flashing red. and oil tumbled on worries about weakened demand. The S&P 500 rose 0.7%, to 3,248.92. The Dow Jones Industrial Average picked up 0.5%, to 28,399.81, and the Nasdaq added 1.3%, to 9,273.40.
Markets have been wracked by uncertainty over how much the virus will spread, how many it might kills and how long the outbreak might persist, hurting economies and corporate profits. Benchmark U.S. crude gained 97 cents to $51.08 per barrel in electronic trading on the New York Mercantile Exchange. It tumbled $1.45, or 2.8%, on Monday to settle at $50.11 per barrel on worries the virus crisis might crush demand. It had been above $63 toward the start of the year, before the virus outbreak. Brent crude, the international standard, added 57 cents to $55.02 per barrel. It fell $2.17, or 3.8%, to settle at $54.45 per barrel overnight.
In currency trading, the dollar rose to 109.09 Japanese yen from 108.69 yen. The euro was flat at $1.1061.