After a historic fall on Monday, the Tokyo Stock Exchange made a remarkable rebound at the opening on Tuesday. The Nikkei index, which had plunged 12.4% the day before, climbed 10.02% shortly after the opening.
An impressive rebound after a dark day
The Japanese financial center has experienced a real emotional roller coaster in the space of 24 hours. On Monday, the market suffered its biggest drop in points in its history, the victim of an explosive cocktail of fears of recession in the United States and speculation on the yen. On Tuesday morning, the scenario was completely reversed.
At around 9:50 a.m. Tokyo time, the leading Nikkei index stood at 34,610.65 points, up a whopping 10.02 percent. The broader Topix index was not far behind, posting a 10.05 percent gain to 2,451.08 points. The dramatic turnaround was partly fueled by a weakening of the yen against the dollar.
Toshiyuki Kanayama, analyst at Monex, explain : ” Japanese markets are expected to start the day with a significant gain as the yen weakens against the dollar, in addition to a reaction to yesterday's sharp decline.. »
The shock felt in Tokyo had global repercussions. Wall Street suffered its worst session since 2022, with a surge in the “fear index” (VIX), even affecting the Asian stock market.
The Yen: From Enemy to Ally of the Markets
The pivotal role played by the Japanese currency in this extreme volatility deserves special attention. On Monday, the sudden appreciation of the yen contributed to panic in the markets. On Tuesday, its decline appears to be a stabilizing factor.
Stephen Innes of SPI Asset Management highlights this paradox: “ Interestingly, the yen, which played the role of the villain in yesterday's spectacular sell-off, could become today's hero, offering a potential lifeline amid the ongoing volatility.. »
This instability of the yen is linked to complex speculative movements, in particular the “carry trade”. This practice consists of borrowing in a currency with a low interest rate to invest in another offering better returns. The abrupt unwinding of these positions has amplified the turbulence on the Japanese market.
In short, the rebound in the Tokyo Stock Exchange offers a welcome respite after a day of panic. However, the persistent volatility in global markets calls for caution.
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