Tokyo's primary Nikkei index concluded over 10 percent higher on Tuesday, recovering from a historic selloff the day before due to concerns about the US economy and a strengthening yen. The Nikkei 225 index surged by 10.23 percent, equivalent to 3,217.04 points, closing at 34,675.46, while the broader Topix index rose by 9.30 percent, or 207.06 points, to 2,434.21.
On Monday, the Nikkei had plummeted by more than 12 percent, or 4,451.28 points, marking the largest single-day points drop in its history. Prime Minister Fumio Kishida advised approaching these drastic fluctuations with composure, as experts foresee continued volatility in the coming days.
"The stock market is active again today, and it is crucial to assess this scenario rationally," Kishida stated during a press conference. "We will maintain a vigilant watch over the market and coordinate closely with the Bank of Japan for economic and fiscal policies," he added. Nomura Securities noted that the market is expected to stay unstable this week, attributing today's rise to a technical rebound following the steep decline.
IwaiCosmo Securities pointed out that worries about the US economy have eased somewhat due to a stronger-than-anticipated improvement in service-sector business sentiment for July. Additionally, real wages in Japan turned positive in June for the first time in 27 months, providing some relief. The yen was trading at 145.94 against the dollar, compared to 146.28 earlier in the day, after reaching 141.70 on Monday, its highest value since early January.
A stronger yen is detrimental to Japanese exporters, and recent gains were spurred by central bank decisions that altered long-standing trends. The Bank of Japan recently increased interest rates for the second time in 17 years, with indications of another hike, while the US Federal Reserve suggested a potential cut as early as September.
Among significant stocks in Tokyo on Tuesday, Honda surged by 14.70 percent to 1,435.5 yen following news of an anticipated record quarterly profit. Toyota rose by 12.81 percent to 2,518 yen, and Sony Group jumped by 9.12 percent to 12,315 yen.
