BENGALURU: Emerging Asian stocks gained some ground on Thursday after a steep sell-off in the previous session, as traders raised their bets of an outsized rate cut by the Federal Reserve on lingering concerns over the growth outlook in the United States.

An MSCI gauge of Asian emerging market assets outside of Japan gained as much as 0.8%, partially recovering from a 1.8% decline on Wednesday when it ended at its lowest level since mid-August.

Stocks in Taiwan, which makes up around 21% of the regional index, gained up to 1.9% after a sharp 4.5% tumble in the previous session, with the world’s largest contract chipmaker Taiwan Semiconductor Manufacturing Co adding 2.8%.

“While the magnitude of the rate cut continues to be a key concern, growth and the probability of a recession will also be an ultimate consideration,” analysts at Maybank said, referring to the Fed’s expected easing and the US economy.

Volatility in stock markets around the world has intensified after soft US economic data reignited concerns about the health of the world’s biggest economy, prompting a flight from risky assets and raising the odds of the Fed delivering a more aggressive easing in monetary policy.

The market is now pricing in a 45% chance of a half point rate cut by the Fed on Sept. 18, up from 38% a day ago, with 110 basis points of easing expected over the remaining three meetings this year, CME’s FedWatch tool showed. The dollar index, which measures the greenback against a basket of major currencies, was trading around 101.33 in Asian hours, after a larger-than-expected decline in US job openings in July.

Traders will also be looking at US services industry and jobless claims data later in the global day, with the main event being the US payrolls data on Friday to try and gauge what the Fed is likely to do.

Chris Weston, head of research at broker Pepperstone, said a “poor” non-farm payrolls report could result in an even chance of a 50 basis point cut, attracting more dollar sellers “across the FX landscape”.