Japan stocks rebound sharply after worst rout in history
The Nikkei 225 last traded about 11% higher, while South Korea’s Kospi rebounded by 4.2%. Hong Kong’s Hang Seng Index rose 1%. They all suffered major losses during the previous trading session.
On Monday, the Nikkei closed down 12.4% in its largest one-day fall since October 1987. It lost 4,451, its biggest point drop in history. The plunge triggered a global market rout. All major Asian, European and US markets fell substantially.
Growing worries about a recession in the US economy and the rapid unwinding of popular carry trades involving the yen had sent the markets into a tailspin.
The surge in the yen, which started with the Bank of Japan signalling a hawkish tilt in monetary policy in recent weeks, forced many market participants to quickly unload the yen carry trades. On Monday, the yen hit a seven-month high against the US dollar at around 143. It pulled back slightly on Tuesday, down 0.8% to 145.
This is a developing story and will be updated.
Despite the recent market recovery, businesses in Asia might still be concerned about the potential impact of the US economic recession on their operations. The sell-off in US markets, along with the rising yen, could pose challenges for companies with significant exposure to these markets.
