Japan Stocks Rebound
Japan stocks markets saw a dramatic rebound on Tuesday. After the Nikkei 225 and Topix suffered significant losses, they rebounded by up to 10%. This was a stark contrast to their previous session’s declines. On that day, the Nikkei 225 experienced its largest loss since the 1987 Black Monday crash. Consequently, it saw a remarkable turnaround, gaining as much as 10% before settling at an 8% increase.
Bank of Japan’s Impact
The rebound followed the Bank of Japan’s decision to raise interest rates to their highest level since 2008 on July 30. This move caused the yen to strengthen to a seven-month high. As a result, it put pressure on stocks globally. Additionally, fears of a U.S. recession, exacerbated by a weaker-than-expected jobs report, unsettled the markets.
Asian Markets
Other Asia-Pacific markets also showed positive movements. South Korea’s Kospi rose by over 3%, while the Kosdaq increased by more than 4.5%. South Korean markets had been halted temporarily on Monday due to an 8% drop, triggering circuit breakers. Key South Korean stocks, such as Samsung Electronics and SK Hynix, saw gains of 2.1% and 4.5%, respectively.
China and Hong Kong
Mainland China’s CSI 300 opened flat, while Hong Kong’s Hang Seng index climbed 1.03%. In Australia, the S&P/ASX 200 saw a modest rise of 0.27%.
Oil Prices
Oil prices also surged, with Brent crude climbing 1.65% to $77.56 per barrel. U.S. West Texas Intermediate crude rose 1.86% to $74.30 per barrel.
Economic Indicators
In Japan, June household spending showed a larger-than-expected fall of 1.4% year-over-year in real terms. Despite this, the average monthly income per household increased by 3.1% in real terms. Additionally, real wages grew by 1.1% in June, marking the first increase in 26 months. This strong wage growth provides the Bank of Japan with more leeway to tighten its monetary policy.
Looking Ahead
The Reserve Bank of Australia is expected to release its cash rate later today, with predictions suggesting it will remain steady at 4.35%. Meanwhile, U.S. markets faced their worst session since September 2022, with the Dow dropping 2.6% and the S&P 500 sliding 3%. The Nasdaq Composite fell by 3.43%, ending 15% below its closing high.
