Japanese shares rebounded on Tuesday after a sharp plunge on Monday that sent shockwaves through global financial markets.
The Nikkei 225 stock index surged by 10.23%, or 3,217 points, marking its largest one-day rally in points, after dropping more than 12% the previous day.
Monday’s market rout in Tokyo followed the Bank of Japan’s second rate hike in 17 years, which caused the yen to soar against the dollar.
This made Japanese stocks and the country’s exports more expensive for foreign investors and buyers.
Stocks in the US, the UK, and Europe also fell on Monday due to concerns that the American economy might be heading for a slowdown.
Jesper Koll, executive director of Monex Group Japan, stated that he still had confidence in the country’s stocks despite Monday’s significant declines.
“Japan’s fundamentals are strong, recession risks are nil, and corporate leaders are dead-set on raising capital returns,” he told the BBC.
Shares in South Korea also regained some ground on Tuesday. The Kospi stock index rose 3.5% after falling 8.8% on Monday, its worst trading session since the global financial crisis of 2008.
Taiwan’s main stock index jumped almost 3.4% after a record 8.4% drop on Monday.
This news comes after global share prices tumbled on Monday.
In New York, the technology-heavy Nasdaq index opened 6.3% lower, but those losses eased during the day, and the index ended the session down 3.4%. The S&P 500 fell 3%, and the Dow Jones Industrial Average was down 2.6% by the end of trading on Monday.
In Europe, the CAC-40 in Paris trimmed earlier losses to end 1.4% lower, while Frankfurt’s DAX and the UK’s FTSE 100 each lost about 2%.
Weak jobs data in the US on Friday sparked concerns about growth in the world’s largest economy. It also fueled speculation about when and by how much the Federal Reserve might cut interest rates.
“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.
There are also concerns that shares in big technology companies, particularly those heavily investing in artificial intelligence (AI), have been overvalued and are now facing difficulties.
Last week, chipmaker Intel announced major layoffs and disappointing financial results.
Additionally, there is speculation that rival Nvidia, one of the main beneficiaries of the boom in demand for AI technology, may delay its latest product launch.