Japanese shares rally hard after biggest sell-off since 1987 Black Monday crash By Reuters

From Investing.com: 2024-08-06 03:00:35

Japanese stocks rebounded sharply on Tuesday, recovering from double-digit losses the previous day due to concerns over recession and equity valuations. The Nikkei surged 8% to 33,975.53 after plunging 12.4% the day before, with the broader Topix up 7.5% at 2,394.33. Traders are reassessing market conditions, sparking a rally in Asian markets.

The market’s rally was driven by investors reevaluating their initial response to the sell-off and buying shares on the dip. The yen’s reversal and the easing of carnage in global carry trades contributed to the market rebound. Uncertainties persist despite the rally, with analysts warning of potential volatile market moves in the near future.

Japanese officials are working to calm markets, with Prime Minister Fumio Kishida urging caution and a scheduled emergency meeting to discuss market conditions. The recent collapse saw the Nikkei lose 113 trillion yen ($792 billion) in market value, prompting comparisons to previous market downturns such as the global financial crisis and the Tohoku earthquake.

The BOJ’s recent interest rate hike, combined with worries about a possible U.S. recession, have added to market jitters. Investors fear a policy misstep by the BOJ and are reviewing their Japan overweight positions. Tech shares surged on Tuesday, with SoftBank Group leading the gains. Circuit breakers were triggered multiple times during the session, pausing trading in futures markets.



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