Asian shares bounce but sentiment remains fragile

SYDNEY (Reuters): Asian shares bounced from last week’s steep declines on Monday, though sentiment remained fragile amid heightened worries about corporate earnings and a slowdown in global economic growth.

Wider sentiment in markets has been hit by a range of negative factors from an intensifying China-US trade conflict to worries about US corporate earnings to Italian budget woes as well as Federal Reserve rate increases.

MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.4% after sliding almost 4% last week.

Among emerging markets, Brazilian-linked stocks got a lift from the South American country’s presidential election, which saw the victory of far-right candidate JairBolsonaro whose campaign centred on promises to clean up politics and crack down on crime.

Japan’s Nikkei rallied 1% while Australian shares climbed 0.8%. South Korea’s KOSPI added 0.7%.

E-Mini futures for the S&P 500 ESc1 and Dow minis 1YMc1 were also 0.3% higher each after a tumultuous week on Wall Street.

Chinese shares, however, bucked the trend with the blue-chip CSI 300 index down 0.9%. Hong Kong’s Hang Seng index jumped 0.7%.

Analysts warn of more volatility after heavy losses across major equity indices left investors with negative returns for the year. Bears are on the rise, with some indices already in official correction territory amid heightened worries over corporate earnings and global growth.

The S&P 500 ended at its lowest level since early May on Friday and flirted with correction territory, pressured by heavy losses in technology and internet shares.