Japanese shares rebounded on Tuesday morning after a dramatic plunge on Monday sent shockwaves through global financial markets. The Nikkei 225 stock index rose by as much as 10% following a 12% drop the previous day.
The market rout in Tokyo was triggered by the Bank of Japan’s second rate hike in 17 years, causing the yen to soar against the dollar and making Japanese stocks and exports more expensive for foreign investors. This led to fears of a slowdown in the American economy, resulting in stock declines in the US, UK, and Europe.
Despite the steep falls, Jesper Koll, executive director of Monex Group Japan, expressed confidence in Japan’s strong fundamentals and corporate leaders’ commitment to raising capital returns. Shares in South Korea and Taiwan also saw gains after significant losses on Monday.
In the US, the Nasdaq index opened 6.3% lower but recovered to end the session down 3.4%. The S&P 500 fell 3% and the Dow Jones Industrial Average was 2.6% lower by the close of trading. In Europe, the CAC-40 in Paris, Frankfurt’s DAX, and the UK’s FTSE 100 all experienced losses.
Weak jobs data in the US on Friday raised concerns about economic growth and speculation about potential interest rate cuts by the Federal Reserve. Moody’s Analytics senior economist Stefan Angrick warned of continued volatility in the markets until the Fed’s decision in September.
Additionally, concerns about overvaluation and difficulties faced by big technology companies investing in artificial intelligence (AI) have contributed to market uncertainty. Intel recently announced layoffs and disappointing financial results, while Nvidia, a key player in AI technology, may delay its latest product launch.
As global markets navigate these challenges, investors are bracing for further fluctuations and closely monitoring economic indicators and central bank decisions for guidance.
