Aug 10 (News On Japan) - The Japanese Nikkei 225 and Topix markets rebounded more than 10% on Tuesday, August 6th, after a bear run saw prices drop to technical support levels. The bounce came as the yen slumped 1% against the dollar, making the country’s shares a more appealing investment opportunity.
Banks rallied nearly 4% as 10-year bonds increased 14 points. The gains represent the highest daily increase since October 2008 and will have brought relief to investors, who had been forced to endure the worst crash since 1987 in a highly turbulent month.
Currency traders and investors, such as those using Tigerpay, have seen a turbulent few days across Japanese markets. Tigerpay allows users to hold and use multiple currencies, including cryptocurrencies, making it a popular choice for crypto gambling, share trading, and foreign exchange holders. According to writer, Makoto Fukae, Tigerpay allows the holding of Japanese Yen as well as other currencies (source:https://readwrite.com/jp/gambling/tigerpay/). The platform’s low fees and easy account verification make it popular among gamblers, in particular.
Fears Of A US Recession
Monday saw considerable losses for global markets, driven by fears of a looming US recession and poor-performing tech stocks. A rise in Japanese interest rates also saw the market react negatively, with the Nikkei closing 12.4% down. At the same time, Wall Street also fell around 3%.
Yen Movements
Monday also saw the Yen hit 143 against the dollar, which is the highest it has been for 7 months, but fell back to 146 on Tuesday. The change was driven by the Bank of Japan’s recent aggressive change to its economic policies. This led to an unwinding of yen carry trades.
On Wednesday, the BOJ announced the year’s second interest rate increase and the market expects more rises to follow later in the year. The bank has faced a lot of criticism for the rise, which may lead them to curb future rises, and the bank has tried to calm concerns.
A Call For Calm
Despite the market upheaval, however, Japanese Prime Minister Fumio Kishida called for calm in the market and said that he was optimistic about the economy’s outlook for the rest of the year.
The Japanese economy is strongly linked to the US. More than half of the country’s production is sold overseas, with the US being a major purchaser of goods, especially cars and related items. If the US enters a recession, consumers will spend less and, in turn, US companies will be less inclined to import items from abroad, which could force Japanese markets lower still.
Yearly Performance
Japanese stock markets have enjoyed a year-long boom, as investors like Warren Buffett pointed to the Japanese market as being a better alternative to the Chinese market. This sentiment led to many investing in the market, but there are now fears that the bullish market might have been led by the yen and that the recent strengthening of the Yen and the sudden pullback of the stock market might, in fact, point to the country’s poor-performing currency as being the main motivation behind the increases.
During the year, some of Japan’s biggest companies, including Toyota, posted record profits, and the Tokyo Stock Exchange encouraged its companies to offer improved shareholder returns.
Some Signs Of Recovery
Historically, when Japanese markets have suffered as a result of global downturns, local investors have stepped in to buy up the bargains and take advantage of low stock prices. However, Monday didn’t see this usual influx of homegrown investment and as new money wasn’t forthcoming, the market faltered further.
On Tuesday, stocks did show considerable recovery. By the close of business, the Nikkei 225 was up 10.2% and followed this with a 1.2% increase during Wednesday trading. However, these gains only pushed the markets back to roughly where they were at the start of the year.
