Stocks rally after Monday’s sell-off
Japan’s Nikkei 225 share index soared nearly 11% after plunging to a record 12.4% on Monday – its biggest fall since “Black Monday” in October, 1987.
The numbers flashing on trading screens on Monday shocked even market veterans. However, Asian stocks bounced back on Tuesday.
In Tokyo, the tech-heavy Nikkei recovered by 10.9%; in Seoul the Kospi rose by 7.9%.
The return of relative calm comes after global markets lost $6.4 trillion (R119trl) in three weeks.
“Calm finally appears to be returning,” Bas van Geffen of Rabobank said in a report. He said the Nikkei’s 10% gain didn’t make up for Monday’s loss, “but at least it takes some of the panic out of the selling”.
Nicholas Smith, Japan strategist at London-based investment company CLSA, pointed to the exaggerated impact of algorithmic trading programmes, which may have specifically responded to the recent sharp upwards move in the yen.
“It does look like they are correlated with the yen,” Smith told the Financial Times. “After all the excitement about the prospects of AI, it now looks like AI may have got us into this mess,” he said.
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