Japanese shares experienced a remarkable rebound on Tuesday, recovering from a severe slump that had unsettled global financial markets. The Nikkei 225 stock index soared by 10.23%, or 3,217 points, marking its biggest one-day rally when measured in points, following a more than 12% plunge the previous day.
Monday’s market turmoil in Tokyo was triggered by the Bank of Japan’s second rate hike in 17 years, which sent the yen soaring against the dollar, making Japanese stocks and exports more expensive for foreign investors and buyers.
Despite the sharp decline on Monday, Jesper Koll, executive director of Monex Group Japan, expressed confidence in the country’s stocks. “Japan’s fundamentals are strong, recession risks are nil, and corporate leaders are dead-set on raising capital returns,” he told the BBC.
The rebound wasn’t limited to Japan. Shares in South Korea also recovered, with the Kospi stock index rising 3.5% after an 8.8% drop on Monday, its worst trading session since the global financial crisis of 2008. Similarly, Taiwan’s main stock index jumped almost 3.4% after a record 8.4% decline the previous day.
Monday’s global sell-off was felt worldwide. In New York, the technology-heavy Nasdaq index opened 6.3% lower but recovered slightly to close down 3.4%. The S&P 500 fell 3%, and the Dow Jones Industrial Average ended the session 2.6% lower. In Europe, the CAC-40 in Paris trimmed losses to end 1.4% lower, while Frankfurt’s DAX and the UK’s FTSE 100 each lost about 2%.
The market volatility was fueled by weak US jobs data released on Friday, which raised concerns about growth in the world’s largest economy and speculation about the Federal Reserve’s next interest rate moves. “Markets are very volatile at the moment and will likely stay volatile until the Fed decision in September. So we wouldn’t rule out rapid swings in both directions,” said Stefan Angrick, a senior economist with Moody’s Analytics.
Concerns also linger about the valuation of major technology companies, especially those heavily investing in artificial intelligence (AI). Last week, chipmaker Intel announced major layoffs and disappointing financial results, while there is speculation that Nvidia, a significant beneficiary of the AI boom, may delay its latest product launch.
The recent fluctuations highlight the ongoing uncertainty in global markets, with investors closely watching economic indicators and central bank decisions.