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(June 16): Asian markets are roaring back from yesterday’s declines, picking up the baton after U.S. equities rallied overnight from another shot in the arm from the Federal Reserve.

The MSCI Asia Pacific Index jumped as much as 3.3% in its biggest increase in about three months on broad gains across the region as benchmarks including Japan’s Topix and the Hang Seng Index in Hong Kong have returned to positive on the week.

Yet even with today’s rally other markets including South Korea and China are still in the red on a weekly basis, leaving plenty of uncertainty whether stocks will be able to sustain this rebound as countries balance reopening their economies with the threat of another wave of coronavirus infections. 

“The key question for investors and traders is whether the gains represent a change in sentiment or a short-term sugar hit,” said Michael McCarthy, chief market strategist with CMC Markets Asia Pacific. “Market wobbles last week were based on increasing concern about secondary viral outbreaks. The risk remains.”

At least for today, the bulls appear to be winning the day, with investors perhaps starting to shift their views on the implications of spikes in local infections, according to Stephen Innes, chief global market strategist with AxiCorp Ltd.

“The market is resigning itself to the fact that in the absence of an effective vaccine, the virus will not amazingly vanish,” Innes said in a note to clients. “But with stringent protocols in place, governments around the world will be able to respond much quicker on a proximity basis and contain the spread rather than shutting down large swaths of the economy.”

Even if the recovery is a gradual one, Innes now sees it unlikely governments will return to the broad lock downs of the first half, giving economies some room to breathe.

Mark Mobius, co-founder of Mobius Capital Partners, also now expects stock markets to rebound despite bad news, describing Monday’s selloff as “typical of recoveries from sudden bear markets” in an email.

“We all need to learn how to live with these viruses and build up our immunity and strength to resist the deleterious aspects of them and utilize the beneficial aspects,” he said.