Image credit:business-stock-photo
Japan’s benchmark Nikkei 225 stock average surged by over 1,100 points during intraday trading on Wednesday, a significant rebound after earlier losses. The index ended the morning at 35,849.77, registering a remarkable gain of 1,174.31 points, or 3.39%. This sharp rise came on the heels of a nearly 936-point plunge during the early hours of trading, leaving investors astonished by the rapid turnaround.
The recovery was largely attributed to a speech delivered by Bank of Japan (BOJ) Deputy Governor Shinichi Uchida, who assured investors that the central bank would maintain its ultra-loose monetary policy. Speaking at a conference in Hakodate, Hokkaido, Uchida emphasized that the BOJ would not raise its policy interest rates while financial and capital markets remained unstable. This dovish stance provided much-needed reassurance to traders who had been grappling with uncertainty earlier in the day.
Additionally, the yen’s sharp depreciation against the U.S. dollar further bolstered the market’s upward momentum. In the Tokyo foreign exchange market, the dollar surged above ¥147, significantly higher than the ¥144.71-73 range it had settled in the previous morning. This weakening of the yen has historically been a positive signal for Japanese stocks, as it benefits the nation’s large export-oriented companies, making their goods cheaper for overseas buyers.
Market analysts noted that the sharp rebound in the Nikkei also reflected broader optimism following a positive performance in the U.S. equity markets. Overnight gains in major U.S. indexes, spurred by investor expectations that the Federal Reserve may soon pivot to a more accommodative stance on interest rates, provided a tailwind for Japanese equities. The hope of an interest rate cut from the Fed has fueled a global rally in equities, as central banks in major economies grapple with inflationary pressures and slowing growth.
This latest surge marks one of the most dramatic one-day gains for the Nikkei in recent months and underscores the ongoing volatility in global financial markets. Despite the uncertainty, Japan’s stock market has demonstrated a degree of resilience, with a broad range of sectors attracting strong buying interest. Notably, shares in export-heavy industries, such as automotive and electronics, saw substantial gains, driven by the favorable exchange rate dynamics. Japan continues to face headwinds from global inflationary pressures, supply chain disruptions, and geopolitical tensions, all of which could dampen investor sentiment soon.