Global Markets Rebound After Record Losses
Most stocks rose on Tuesday following the global debacle the day before, as worries about a U.S. recession grow and calls for the Fed to take action to cut interest rates before the next meeting.
Tokyo Leads the Gains
Tokyo stocks, which suffered record losses on Monday, led the gains, rising more than 10% as traders bought stocks that had been hit hard the previous day. London also edged higher after falling about 2 percent on Monday, with Paris and Frankfurt also showing gains.
Volatility Ahead, But Some Comfort on Wall Street
According to Bloomberg, U.S. futures were higher, with the Dow Jones Industrial Average and Nasdaq rising more than 100 points, and the S&P 500 rising nearly 30 points. Analysts warn of potential volatility ahead, but better-than-expected data from the major U.S. services sector provided some comfort.
Unwinding “Carry Trades” and Market Reactions
A sell-off ensued after data on Friday showed U.S. payrolls well below expectations, leading to warnings that the Fed may keep interest rates high for too long and risk triggering a recession. Some analysts point to the “Sam Rule” triggering early recession signs. Commentators also note that the stronger yen has led to investors unwinding “carry trades.”
While Wall Street’s major indexes saw losses, Tokyo’s Nikkei rebounded after a record loss on Monday. Toyota, Sony, and Tokyo Electronics all saw their shares rise significantly, leading to a broad-based rally. Prime Minister Fumio Kishida emphasized the importance of monitoring the situation and working closely with the Bank of Japan on economic and fiscal management.
Stocks in other Asian markets, including Shanghai, Sydney, Seoul, Taipei, Mumbai, and Bangkok, also rose, while Hong Kong gave up early gains. Selling increased in Singapore and Wellington, while Manila remained flat.
