Mumbai, 6 Aug (Commoditiescontrol): Japanese stocks surged at the opening of trading on Tuesday, marking a sharp recovery across battered Asian markets. The Nikkei jumped more than 8%, climbing above 34,000, a significant rebound from its 31,458 close on Monday. This bounce back followed a severe 12.4% drop, the worst selloff since the 1987 Black Monday crash.
The recovery was bolstered by reassuring comments from central bank officials, which helped soothe investor nerves. The surge in the Nikkei was a key driver of positive sentiment across Asian markets, triggering circuit breakers in some exchanges as the rally took hold.
In the U.S., markets also showed signs of stabilizing. S&P 500 futures rebounded by 0.9% in early trading, while Nasdaq futures rose 1.2%. This followed a challenging session on Monday, where the S&P 500 lost 3.00%, and the Nasdaq Composite fell 3.43%.
Currency markets also began to recover from Monday’s volatility. The dollar edged up to 145.64 yen after plummeting 1.5% on Monday, reaching as low as 141.675 yen. The yen had recently strengthened as investors unwound carry trades. The dollar also pared its losses against the Swiss franc, holding steady at 0.8546 francs from a low of 0.8430.
Treasury yields followed suit, coming off their lows in response to a rebound in the U.S. ISM services index, which rose to 51.4 for July. Notably, the employment index within the report jumped 5 points to 51.1, suggesting that last week's payrolls report might have overstated the weakness in the labor market. Yields on 10-year Treasury notes returned to 3.84%, recovering from a low of 3.667%.
Federal Reserve officials played a critical role in calming markets. Fed San Francisco President Mary Daly emphasized the importance of preventing a downturn in the labor market and indicated openness to cutting interest rates if necessary. These remarks reinforced market expectations of a 50-basis-point rate cut at the Fed’s September meeting, with futures indicating an 87% probability of such a move.
In other markets, gold prices remained subdued despite market turmoil, standing at $2,409 an ounce after a 1.52% loss overnight. Meanwhile, oil prices rose early Tuesday, with West Texas Intermediate crude futures climbing $1.18, or 1.6%, to $74.12 per barrel, driven by concerns over a potential wider conflict following an attack on a U.S. military base in Iraq.
(By Commoditiescontrol Bureau: 09820130172)
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