Asian markets closed Tuesday, February 3, 2026, with a dramatic rebound as investors moved decisively back into risk assets following the previous session’s heavy losses. The recovery was broad-based and forceful, particularly in North Asia, where oversold conditions and bargain-hunting combined to trigger one of the strongest single-day advances of the year so far.

The sharp turnaround suggested that Monday’s sell-off was viewed largely as an overreaction rather than the start of a sustained downturn. With volatility easing and dip-buying returning, markets across Asia reclaimed lost ground, signaling renewed confidence in the region’s underlying growth and earnings outlook.

South Korea and Japan Lead a Forceful Regional Recovery

South Korea delivered the standout performance of the session, with the KOSPI Composite Index surging 6.84% to 5,288.08. The rally marked a powerful reversal after Monday’s steep decline and was driven by aggressive buying in technology, semiconductor, and industrial stocks. Investors appeared quick to reprice assets that had been heavily discounted, reflecting confidence that fundamentals remain intact despite short-term volatility.

Japan followed closely, with the Nikkei 225 jumping 3.92% to 54,716.71. Exporters and manufacturing firms led the advance, benefiting from a weaker yen and renewed optimism around global demand. The rebound reinforced Japan’s role as a key beneficiary of improving risk sentiment, particularly when currency dynamics support overseas earnings.

The speed and scale of gains in both markets underscored how rapidly sentiment can shift when investors regain confidence, especially after sharp corrections.

China, India, and Australia Join the Upswing

China’s SSE Composite Index rose 1.29% to 4,067.74, recovering a portion of Monday’s losses. Financials and infrastructure-linked stocks led the move as investors responded to stabilization signals and expectations of continued policy support. While the rebound was more measured than in Korea and Japan, it reflected improving confidence that downside risks remain contained.

India also posted strong gains, with the S&P BSE Sensex climbing 2.56% to 83,759.26. Domestic-focused sectors, including financials and consumer stocks, attracted renewed inflows as investors took advantage of recent weakness. The move highlighted India’s ability to rebound quickly when risk appetite improves, supported by resilient domestic demand and longer-term growth expectations.

Australia’s S&P/ASX 200 advanced 0.89% to 8,857.10, supported by gains in mining, energy, and select financial stocks. The rebound suggested that Monday’s pullback was largely technical, with investors comfortable re-engaging as broader regional sentiment turned positive.

Hong Kong Lags but Closes Higher as Sentiment Stabilizes

Hong Kong’s Hang Seng Index added a modest 0.22% to 26,834.77, underperforming regional peers but still managing to close in positive territory. Technology and financial stocks were mixed, reflecting lingering caution after recent volatility in China-linked assets.

While the gains were restrained, the positive close indicated easing selling pressure and a tentative return of stability. Investors appeared selective, favoring balance-sheet strength and earnings visibility over broad-based exposure.

Currency Moves Support Exporters and Equity Momentum

Currency markets complemented the equity rebound. The Japanese Yen Index fell 0.53%, while the Australian Dollar Index slipped 0.29%, providing mild relief for exporters and helping support equity valuations. The softer currencies reinforced the recovery in export-driven markets, particularly Japan and South Korea.

The absence of sharp currency volatility also helped calm markets, allowing equities to recover without the added pressure of FX-driven uncertainty.

Outlook: Volatility Remains, but Dip-Buying Confidence Returns

Looking ahead, Asian markets may continue to experience heightened volatility as investors navigate rapid sentiment shifts and global macro uncertainty. However, Tuesday’s powerful rebound suggests that underlying confidence remains strong, particularly in technology and export-heavy markets. Attention will now turn to upcoming economic data, earnings updates, and central bank signals to determine whether the recovery can extend.

If global conditions stabilize and currencies remain supportive, the latest pullback-and-rebound pattern may reinforce a buy-the-dip mentality across Asia. Still, investors are likely to remain selective, favoring markets and sectors with clear earnings visibility as February trading unfolds.