Global stock markets saw a notable rise on Wednesday, with Japan’s Nikkei 225 index gaining 1.2% to close at 35,089.62. This surge followed comments from a Bank of Japan official indicating that the central bank would likely hold off on further interest rate increases amidst ongoing market instability.
Germany’s DAX also rose by 1.2%, reaching 17,564.39, as a boost in factory output for June alleviated concerns over disappointing export figures. Meanwhile, the CAC 40 in Paris climbed 1.4% to 7,230.21, and London’s FTSE 100 was up 0.9% to 8,089.70.
Futures for the S&P 500 increased by 1%, while Dow Jones Industrial Average futures rose by 0.7%. The Nikkei index rebounded significantly, recovering over 400 points during the day after a 10% jump on Tuesday, following a dismal trading session that marked its worst performance since 1987.
The market recovery was bolstered by remarks from a high-ranking Bank of Japan official, who noted that despite a recent interest rate hike from 0.1% to 0.25%, the bank’s monetary policy remains accommodative. He emphasized that the Bank of Japan would refrain from raising interest rates further while financial markets remain volatile.
This sentiment acted as a stabilizing force for traders, who had been adjusting their strategies following the recent rate increase, which had triggered widespread selling. Concerns over the performance of the U.S. economy contributed to the turbulence, but the official expressed confidence in a “soft landing” scenario for the United States, steering clear of recession.
On the currency front, the U.S. dollar made a recovery against the yen, rising to 146.78 from 144.32. A weaker yen benefits exporters who make significant revenues abroad, as it had recently traded near a 40-year low.
In related news, China’s exports grew by 7% in July compared to the previous year, falling short of the anticipated near-10% growth. This marked the slowest growth rate in three months, contrasting sharply with June’s performance.
Asian markets continued to show positive momentum, with Hong Kong’s Hang Seng index climbing 1.4% to 16,877.86 and the Shanghai Composite slightly improving by 0.1% to 2,869.83. South Korea’s Kospi surged 1.8% to 2,568.41, while Taiwan’s benchmark index rose by 3.9% following a significant drop in earlier sessions.
On Tuesday, the S&P 500 broke a three-day losing streak with a 1% gain, while the Dow added 0.8% and the Nasdaq increased by 1%. Despite trepidations regarding the pace of U.S. economic growth, many economists remain optimistic about avoiding a recession in the coming year. The Federal Reserve has indicated it has room to reduce interest rates if needed, bolstering investor confidence.
In other commodities, U.S. benchmark crude oil rose by 35 cents to $73.55 per barrel, while Brent crude increased by 36 cents to $76.84. The euro slipped to $1.0913 from $1.0928.
