Most markets rose in Asia on Tuesday as investors looked past rising virus infections in the region and bet on the global recovery, with Tokyo brushing off data showing the Japanese economy shrank more than expected in the first quarter.

Traders built on a broadly positive previous day, despite a retreat on Wall Street, bringing some much-needed stability after last week’s topsy-turvy performance as Federal Reserve officials continue to reassure that fears of long-term red-hot inflation were misplaced.

Also Read: How markets reacted to the ‘disappointing’ US jobs data

The key event this week is the release of minutes from the US central bank’s April policy meeting, which will be scanned for clues about board members’ views on price rises as the world’s top economy bursts back to life as vaccines allow for further reopenings.

There is a worry that the explosive rebound will push inflation so high that the Fed will have to tighten interest rates or wind back other easing measures to keep the situation from running out of control.

In the latest bid to soothe concerns, Fed Vice Chair Richard Clarida “it may take more time to reopen a $20 trillion economy than it did to shut it down”, while Atlanta Fed chief Raphael Bostic told CNBC that not enough progress had been made in fighting unemployment to warrant making any moves now.

Joblessness was still eight million above pre-pandemic levels, he said.

BlackRock Investment Institute strategists led by Jean Boivin, said: “Hotter inflation has materialised and market volatility is rising as the economic restart gathers pace. This is playing out in line with our view that the economy is in a ‘restart’.

“We prefer to look through any volatility and see a later ‘lift-off’ from zero rates than markets expect. This means higher-than-expected inflation in the medium term, and underpins our pro-risk stance.”

Also Read: Watch your stocks: Wall Street gains while Nasdaq experiences dip

In early trade, Tokyo led gains, piling on more than two percent in the face of data showing the Japanese economy contracted more than expected in the first three months of the year, breaking a run of two straight periods of growth, as it was hit by new containment measures.

Major parts of the country including Tokyo, were put into new states of emergency in January, with people urged to stay at home and restaurants told to close earlier. The outbreak has raised concerns that the already delayed summer Olympics could be called off again.

Hong Kong and Seoul rose more than one percent, while Taipei rallied almost four percent after being pummelled in recent days as Taiwan is hit by a surge in virus cases. Singapore was also well up on bargain-buying but traders there are also taking fright at a jump in infections. Shanghai, Wellington and Manila were in the red.

“The economic recovery from the pandemic remains largely on track although with inflation looking a bit stronger and employment growth a little weaker than might have been anticipated a few months ago,” said David Kelly, at JP Morgan Asset Management.

“Markets continue to view this progress favorably, with long-term interest rates remaining remarkably calm and the stock market, so far, avoiding any sharp correction.”

Tokyo – Nikkei 225: UP 2.1 percent at 28,402.64 (break)

Hong Kong – Hang Seng Index: UP 1.1 percent at 28,512.09

Shanghai – Composite: DOWN 0.1 percent at 3,512.75

Euro/dollar: UP at $1.2164 from $1.2155 at 2030 GMT

Pound/dollar: UP at $1.4169 from $1.4141

Euro/pound: DOWN at 85.85 pence from 85.94 pence

Dollar/yen: DOWN at 109.17 yen from 109.20 yen

West Texas Intermediate: UP 0.3 percent at $66.46 per barrel

Brent North Sea crude: UP 0.3 percent at $69.66 per barrel

New York – Dow: DOWN 0.2 percent at 34,327.79 (close)

London – FTSE 100: DOWN 0.2 percent at 7,032.85 (close)

— Bloomberg News contributed to this story —