Asian markets make solid gains following global rout

Asian markets saw notable gains on Wednesday, with Japanese shares rebounding from earlier losses. The benchmark Nikkei 225 ended 1.2% higher, recovering from a 2.5% drop earlier in the session. This recovery followed comments from Shinichi Uchida, deputy governor of the Bank of Japan (BOJ), who downplayed the likelihood of an immediate interest rate hike.

Elsewhere in Asia, South Korea’s Kospi rose 1.8%, Hong Kong’s Hang Seng index increased by 1.3%, and Taiwan’s Taiex surged 3.9%. These gains came after several days of volatility, including the Nikkei’s largest daily drop since 1987 on Monday, which had led to a global sell-off and Wall Street’s worst day since 2022.

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Uchida stated that recent market volatility could influence the BOJ’s approach to rate hikes if it impacts their economic and inflation forecasts. He emphasized that the BOJ would not raise interest rates amid unstable financial markets and would maintain current monetary easing levels for the time being. This stance contrasts with the BOJ’s recent hawkish rhetoric, which had led many investors to unwind yen carry trades—a strategy involving borrowing yen at low interest rates to invest in higher-yielding assets.

The US dollar rose more than 2% to 147.77 yen following Uchida’s remarks, reversing recent trends where the yen had been strengthening against the dollar due to the BOJ’s previous hawkishness. The rapid appreciation of the yen has been challenging for Japanese manufacturers by diminishing the competitiveness of their exports.

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In Japan, the Topix index, which includes a broader range of stocks than the Nikkei, closed 2.3% higher. In Europe, the Stoxx 600 index was up 0.8% in morning trade. US stock futures also indicated a positive start to the day, with Dow futures up 0.6%, S&P 500 futures rising 0.7%, and Nasdaq futures climbing 0.8%. On Tuesday, the Dow increased by about 0.8%, and both the S&P 500 and Nasdaq gained around 1%.

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