Shares in Asia experienced mixed movements on Wednesday, with Japan’s Nikkei 225 index initially dropping after opening but then recovering to a 2.3% increase by midmorning, reaching 35,464.61. This followed a significant 10% surge on Tuesday, which helped to recuperate losses incurred during its worst day since 1987.
These gains were triggered by comments made by a Bank of Japan official, highlighting that despite a recent interest rate hike from 0.1% to 0.25%, monetary policy remains accommodative. The increase in interest rates instigated selling pressure from traders adjusting to higher costs for carry trades, leading to a rise in the Japanese yen’s value against the U.S. dollar.
The rebound of the dollar against the yen, reaching 146.47 yen from 144.44 late Tuesday, favored export manufacturers whose revenue is mainly generated overseas. The yen’s value had sharply risen post the BOJ’s rate hike, but it had previously reached a near four-decade high of 160 yen.
Other Asian markets also experienced varied movements, with Hong Kong’s Hang Seng declining by 0.3% to 16,647.34, while the Shanghai Composite index gained 0.2% to 2,873.25. South Korea’s Kospi surged by 2.6% to 2,587.78, and Taiwan’s benchmark index climbed by over 3%, recovering losses from the previous sell-offs primarily driven by technology shares.
In Australia, the S&P/ASX 200 index was up by 0.4% at 7,712.20. On Tuesday, the S&P 500 managed to break a three-day losing streak by rising 1% to 5,240.03. This was supported by stronger-than-expected profit reports from major U.S. companies like Kenvue, Uber, and Caterpillar.
Despite concerns about a potential economic slowdown, the U.S. economy continues to grow, with many economists viewing a recession in the near future as improbable. The Federal Reserve also asserts its readiness to lower interest rates if the job market significantly weakens.
The S&P 500 has reached numerous all-time highs this year, currently up nearly 10% in 2024. However, some critics warn that the market’s current enthusiasm over artificial intelligence technology has potentially inflated stock prices. Treasury yields made a slight recovery on Wednesday, with the 10-year Treasury yield rising to 3.88% from 3.78% on Monday, partially rebounding from previous drops.
In early trading on Wednesday, U.S. benchmark crude oil was slightly lower at $73.05 per barrel, while Brent crude, the international benchmark, fell to $76.31.
