TOKYO (AP) — Asian shares saw an upward movement on Thursday, buoyed by gains in U.S. stocks after they rebounded from significant early losses, marking the seventh consecutive day of increases. However, many markets in the region remained closed for Labor Day holidays, and investors stayed cautious due to ongoing uncertainties stemming from President Donald Trump’s trade policies.

The Nikkei 225, Japan’s benchmark stock index, rose by 0.9% to finish at 36,359.24. This increase followed the Bank of Japan’s decision to maintain its benchmark interest rate, amid growing concerns regarding the potential impact of Trump’s trade policies on the Japanese economy. Meanwhile, Australia’s S&P/ASX 200 experienced a slight increase of less than 0.1%, closing at 8,137.40.

In the U.S., the S&P 500 edged up by 0.1%, extending its winning streak to seven days, closing at 5,569.06. The Dow Jones Industrial Average rose by 0.3% to end at 40,669.36, while the Nasdaq composite dipped slightly by 0.1%, closing at 17,446.34. This turnaround in the U.S. equity markets was striking, particularly after an initial drop of 2.3% for the S&P 500 and a staggering 780-point fall for the Dow during early trading.

The stocks’ initial declines were prompted by a report indicating that the U.S. economy may have contracted at the start of the year, diverging sharply from economists’ expectations and contrasting with robust growth reported at the end of the previous year. This downturn has raised concerns about a potential “stagflation” scenario, characterized by stagnant economic growth coupled with persistent inflation. Economists fear such a scenario due to the limited tools available for the Federal Reserve to address both issues simultaneously.

Adding to investor apprehension, a report from ADP revealed that private-sector job creation for April was far lower than expected, with employers hiring less than half the anticipated number of workers. This development is alarming, as a solid job market has typically underpinned the stability of the U.S. economy. A more comprehensive job market report from the U.S. government is set to be released on Friday, which may further clarify the situation.

Meanwhile, some more favorable economic news emerged, revealing that a preferred measure of inflation by the Federal Reserve slowed in March. Inflation eased to 2.3%, approaching the Fed’s target of 2%, down from 2.7% in February. This positive development prompted a recovery in stock prices almost immediately following the report’s release, as lower inflation may afford the Federal Reserve greater flexibility in cutting interest rates to stimulate the economy.

Despite this optimistic signal, the ongoing uncertainty around Trump’s tariffs continues to stir volatility in the financial markets, leading to drastic fluctuations in stocks, bonds, and the value of the U.S. dollar. In April, the S&P 500 briefly saw a dip of nearly 20% from its all-time high, with fears growing of the worst April performance since the Great Depression. Ultimately, the index concluded April with just a 0.8% decline, a stark contrast to the previous month’s larger drop, and now sits 9.4% below its peak.

In the bond market, Treasury yields fell as market expectations shifted towards potential interest rate cuts by the Federal Reserve. The yield on the 10-year Treasury bond decreased to 4.17% from 4.19% late Tuesday.

On the commodities front, early Thursday saw U.S. benchmark crude oil prices declined by 10 cents, bringing the price to $58.11 per barrel. Meanwhile, Brent crude, the international standard, saw a marginal drop of 5 cents to $61.01 a barrel. In currency markets, the U.S. dollar strengthened against the Japanese yen, rising to 143.88 from 143.06, while the euro slipped to $1.1308 from $1.1331.