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Japanese stock market rebounds strongly following big sell-off
(MENAFN) Japanese Stocks saw a significant rebound on Tuesday following a sharp sell-off in the previous session. The rebound was fueled by easing investor concerns regarding stock valuations and the potential for a U.S. recession, spurred by comments from the Federal Reserve and supportive economic data. The NIKKEI index notably recovered after experiencing its largest daily drop since the Black Monday crash of 1987. Concurrently, the yen's earlier gains diminished, suggesting that losses from global yen-funded trades were starting to alleviate. By the end of the day, the Nikkei had surged by 10.2 percent to close at 34,675.46, marking a dramatic recovery from Monday's 12.4 percent plunge. This recovery amounted to an increase of 3,217.04 points, the largest one-day gain in the index's history and its most significant daily percentage rise since October 2008. Similarly, the broader Topix index saw a substantial jump of 9.3 percent, closing at 2,434.21.
The sharp decline in global stock markets last week had left investors on edge, with fears of a potential U.S. recession and concerns about the liquidation of yen-funded investments triggering a wave of selling in Japanese shares on Monday. The dramatic sell-off had caused significant anxiety among investors, leading to a highly volatile trading environment. However, Tuesday's rebound indicated a shift in sentiment, as traders reassessed the severity of their initial reactions. The reconsideration of the market's outlook led to a buying back of shares, contributing to the significant recovery seen in the indices.
Ray Sharma-Ong, head of multi-asset investment solutions for Southeast Asia at Aberdeen, commented on the situation, noting that the fundamental conditions of the Japanese economy had not undergone significant changes. The sell-off, according to Sharma-Ong, was largely driven by the global trading losses, which had a ripple effect on Japanese markets. As the panic subsided, the reassessment of market conditions led to a more measured approach from investors, resulting in the substantial gains observed on Tuesday. This period of recovery highlights the volatility and interconnectedness of global markets and the influence of international economic factors on local stock performance.
The sharp decline in global stock markets last week had left investors on edge, with fears of a potential U.S. recession and concerns about the liquidation of yen-funded investments triggering a wave of selling in Japanese shares on Monday. The dramatic sell-off had caused significant anxiety among investors, leading to a highly volatile trading environment. However, Tuesday's rebound indicated a shift in sentiment, as traders reassessed the severity of their initial reactions. The reconsideration of the market's outlook led to a buying back of shares, contributing to the significant recovery seen in the indices.
Ray Sharma-Ong, head of multi-asset investment solutions for Southeast Asia at Aberdeen, commented on the situation, noting that the fundamental conditions of the Japanese economy had not undergone significant changes. The sell-off, according to Sharma-Ong, was largely driven by the global trading losses, which had a ripple effect on Japanese markets. As the panic subsided, the reassessment of market conditions led to a more measured approach from investors, resulting in the substantial gains observed on Tuesday. This period of recovery highlights the volatility and interconnectedness of global markets and the influence of international economic factors on local stock performance.
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