Joe McConnell
Japanese stocks rallied in early trading Tuesday, following Monday’s plunge that roiled global financial markets.
The Nikkei 225 stock index rose more than 10% after falling more than 12% the previous day.
Yesterday’s market crash in Tokyo came after the Bank of Japan’s second interest rate hike in 17 years sent the yen soaring against the dollar, making Japanese stocks – and the country’s assets more expensive for foreign investors and buyers.
Stocks in the U.S. and Europe also fell on Monday due to fears that the U.S. economy is heading for a slowdown.
Stocks in South Korea also rallied on Tuesday. The Kospi stock index rose nearly 5% after falling 8.8% on Tuesday, its worst trading session since the 2008 global financial crisis.
- Earlier in New York, the technology-focused Nasdaq index opened down 6.3%, but losses eased as the day progressed and the index closed the session down 3.4%.
- At the close of trading on Monday, the S&P 500 Index was down 3% and the Dow Jones Industrial Average was down 2.6%.
- In Europe, Paris’s CAC-40 pared earlier losses, closing down 1.4%, while Frankfurt’s DAX and the UK’s FTSE 100 lost around 2% each.
Weak US employment data on Friday has raised concerns about the growth of the world’s largest economy.
It also fueled speculation about when and by how much the Federal Reserve will cut interest rates.
“Markets are very volatile right now and will likely remain volatile until the Fed’s decision in September. So we wouldn’t rule out rapid swings in either direction,” said Stefan Angrick, senior economist at Moody’s Analytics.
There are also concerns that the stocks of big tech companies, particularly those investing heavily in artificial intelligence (AI), are overvalued and are now in trouble.
Last week, the chipmaker Intel Announces Major Layoffsin addition to disappointing financial results.
There is also speculation that rival Nvidia, which has been a major beneficiary of the boom in demand for AI technology, will delay the launch of its latest product.
