Japan’s Nikkei 225 jumped, following the index’s biggest one-day decline since October 1997. The Japanese yen retreated vs. the U.S. dollar, after a strong rally in recent days helped trigger the stock market sell-off at home and abroad.
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The Nikkei leapt 8.9% intraday Tuesday local time. On Monday, the benchmark index dived 12.4%.
The Japanese yen fell to 144.69 vs. the dollar. On Monday, the U.S. dollar fell 1.62% to 144.18 yen at 4 p.m. ET, down 6.4% over five sessions. The dollar-yen exchange rate closed 10.8% from its 52-week high set on July 10.
The Bank of Japan raised its key interest rate to 0.25% from 0%-0.1% on July 31, while also announcing plans to reduce bond buying. Later that day, the Federal Reserve signaled U.S. rate cuts were coming, with market bets intensifying in the coming days on recession fears. All that trigger the yen’s rally as global investors unwound the long-running yen carry trade, which boosted global liquidity.
The rising yen, U.S. recession fears as well as weekend news on Nvidia (NVDA) and Apple (AAPL), triggered the massive market losses worldwide Monday.
U.S. stocks came off Monday lows, though the major indexes still fell sharply. Treasury yields largely erased huge early losses.
U.S. stock futures rose Monday night, led by techs.
The Nikkei and yen turnaround, along with bounces in other Asian markets, offer further hope for stabilization in global financial markets.
Please follow Ed Carson on Threads at @edcarson1971 and X/Twitter at @IBD_ECarson for stock market updates and more.
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