Japanese stocks saw a sharp rebound on Tuesday from the previous session’s double-digit losses as Federal Reserve comments and economic data eased investor concerns over equity valuations and a possible U.S. recession.
Following a volatile day of trading, the Nikkei closed 10.23 percent higher at 34,675.46, after sliding 12.4 percent on Monday. The index closed up 3,217.04 points, marking its largest ever single-day point gains. It was also the Nikkei’s biggest daily percentage rise since October 2008. The broader Topix index climbed 9.3 percent to 2,434.21 after losing 12.48 percent to 2,220.91 in the previous session.
Japanese equities sell-off
Investor confidence has taken a hit by last week’s tumble in global stock markets, U.S. recession risks, and worries that investments funded by a cheap yen softened, triggering a sell-off in Japanese equities on Monday.
Traders reconsidered the severity of their initial response, buying back shares lower. The Japanese Nikkei index rally supported other Asian stock markets. Overnight, safe-haven U.S. yields also rose from lows, signaling an easing in panic. However, uncertainties persisted, with analysts pointing to the possibility of more volatile market moves in the near term.
The Ministry of Finance, Financial Services Agency, and the Bank of Japan held an emergency trilateral meeting at 6:00 GMT to discuss market conditions, calling on participants to stay calm.
From July 11 to Monday’s crash, the Nikkei index lost $792 billion off its peak market value.
Interest rate hike raises fears
Last week, the Bank of Japan raised interest rates to levels unseen in 15 years, a hawkish move that analysts also say raised market concerns especially given fears of a possible U.S. recession.
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