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Japanese stocks rally after Wall Street's big rebound, but South Korea and Shanghai markets drop

Japanese stocks rally after Wall Street's big rebound, but South Korea and Shanghai markets drop
Pedestrians in Tokyo pass a board showing figures for the Tokyo and New York stock exchanges. (Kazuhiro Nogi / AFP/Getty Images)

An incredible day on Wall Street, where major indexes finished at least 5% higher, lifted Japanese stocks but received a mixed reaction in the rest of Asia on Thursday as some traders returned from a Christmas break.

Japan's Nikkei 225 index rebounded 3.9% to 20,077.62. It tumbled more than 5% on Tuesday before recovering slightly a day later. South Korea's Kospi dropped 0.2% to 2,025.05 and the Shanghai Composite index lost 0.1% to 2,495.01.

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Markets in Hong Kong and Australia reopened after Christmas. The Hang Seng index was 0.5% lower at 25,521.09. Australia's S&P-ASX 200 jumped 1.9% to 5,597.20. Stocks climbed in Taiwan and throughout Southeast Asia.

On Wednesday, U.S. markets snapped a four-day losing streak and clocked their best day in more than 10 years. Investors were reassured by an official signal that President Trump, who has heavily criticized the Fed on Twitter, will not try to oust Chairman Jerome Powell.

The broad S&P 500 index soared 5% to 2,467.70. The Dow Jones industrial average added over 1,000 points — its biggest point gain in a day — or 5% to 22,878.45. The Nasdaq composite picked up 5.8% to 6,554.36. The Russell 2000 index of smaller-company stocks rose 5% to 1,329.81.

Trading was buoyed by data showing that growth of U.S. holiday sales was at six-year high. Retail sales gained 5.1% between Nov. 1 and Dec. 24 compared with a year ago, Mastercard SpendingPulse reported. It tracked spending online and in stores across all payment types, including cash and check. All in all, shoppers spent more than $850 billion this year, it added.

"The question, of course, is whether this is just a snapback bear market rally, or as Trump said, 'a tremendous opportunity to buy stocks’" Chris Weston of Pepperstone Group Limited said in a market commentary.

"We can assess the fundamental drivers, such as poor global economics, the Fed not altering its forward guidance or providing flexibility to the pace of balance sheet normalization, and ascertain nothing has really changed here," he added.

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