Japan leads stock rebound after the Fed bids to reassure

STORY: Japanese stocks bounced back Tuesday morning, recovering from a historic slump the day before.

The Nikkei index was up around 9% by late morning, clawing back much of the 12.4% it shed on Monday.

European and U.S. markets had also fallen that day.

But sentiment started to recover after officials at the Federal Reserve said they would work to stop a downturn.

Monday data on the U.S. service sector also showed signs of a rebound.

That eased jitters that had been sparked by worse-than-expected economic data out last week, and some underwhelming corporate earnings.

Wells Fargo strategist Scott Wren says tech shares were due a correction, but the economic worries are overblown:

"Stocks that were certainly in technology and communications services sectors, they were highly overvalued, in our opinion. So, I think you're just coming back to some more reasonable valuations. I think that what you're going to see in coming weeks is data, whether it's earnings, whether it's economic data that says, you know, yes, the economy is slowing, the labor market’s weakening, but they're not weakening or slowing substantially. So, this looks a little bit overdone in our opinion.”

Tuesday also saw a recovery for South Korea’s battered Kospi index, up over 4% by lunchtime.

Asian shares outside Japan were up nearly 2% overall.

On currency markets, the dollar clawed back some of the previous day’s losses against the Japanese yen and Swiss franc, which are often seen as safe havens in times of turmoil.

Whether the market drama is over… that’s harder to say.

One analyst told Reuters that volatility looked set to stay high, with only the “bravest” of investors ready to start buying.