Despite the global economic downturn, Japan’s stock market experienced a significant rebound today following the dramatic record single-day fall in stock market points on Monday.
Investors’ purchasing of low-priced stocks, coupled with their confidence in the Asian market, and the recovery in US equity futures fueled the market rebound.
Japan’s Nikkei 225 index surged by 10.23%, gaining 3,217.04 points, to close at 34,675.46. The rebound came after the index recorded its largest single-day point drop on Monday.
The recovery in Japan echoes a global trend. In Europe, early trading also showed signs of a rebound for London’s FTSE index, Germany’s Dax, and the continent-wide Stoxx 600, all of which had experienced drops by Monday’s close.
The US Futures for the broader S&P 500 – an index tracking the performance of the world’s 500 most valuable company – saw a 1.5% uptick, while Nasdaq futures – an index that tracks mostly tech companies – rose by 1.4%, according to Reuters.
Monday’s sell-off was driven by growing concerns about a potential recession looming over the US economy.
On Friday, the Federal Reserve, the US central bank, issued an alarming report showing that the American job market is underperforming as it reached 4.3% in July, up from 4.1% a month earlier.
The rise in unemployment triggered fear about the impact of high interest rates on economic growth.
As investors panicked, Wall Street lost $2.9 trillion of market capital in a major sell-off not seen since the COVID-induced economic crisis. Tech giants like Nvidia and Microsoft bore the brunt of the trend, with their market values decreasing by 2% and 5%, respectively.