Topline
Asian stock markets mounted a recovery on Tuesday—led by the Japanese Nikkei 225 index—after being hit with a historic rout on Monday due to recession fears triggered by worse-than-expected U.S. jobs market numbers.
Japanese stocks led a Asian market rebound on Tuesday.
Key Facts
Japan’s Nikkei 225 index surged more than 10% on Tuesday to 34,675 points while the Tokyo Stock Price Index (TOPIX) was up by 8.2%.
The Nikkei’s recovery comes a day after the benchmark index crashed 12.4%, marking its worst single-day selloff since the 1987 “Black Monday” crash.
South Korea’s KOSPI also opened in the green and was up more than 3.74% at 2,532 points in afternoon trading.
Taiwan’s Taiex was also up 3.38% in afternoon trading on Tuesday, led by a nearly 8% bump in the stock price of the world’s biggest chip maker TSMC.
The U.S. futures markets also showed signs of recovery early on Tuesday, with Nasdaq, S&P 500 and Dow Futures up 1.75%, 1.40% and 0.97% respectively.
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Tangent
The CBOE Volatility Index, often called the market’s fear gauge, was at 38.57 points early on Tuesday—a more than 134% increase compared to last week. Monday’s global market rout had pushed the fear index above the 55-point mark before it fell back down below 40, but it still remains at a level not seen since 2020.
Key Background
Both Wall Street and other global stock markets were hit by a major selloff on Monday, after a worse-than-expected U.S. jobs report released on Friday triggered fears of a recession. In the U.S., the benchmark S&P 500 index and 30-company Dow Jones Industrial Average fell 3% and 2.6% respectively—their worst single-day decline since September 2022. The tech-focused Nasdaq was hit even harder by Monday’s rout, falling 3.4%. Last week, the Labor Department reported that the U.S. economy had added 114,000 jobs in July—well short of analysts’ predictions of 185,000 jobs—and the country’s unemployment rate had risen from 4.1% to 4.3%. The numbers raised fears that the Federal Reserve may have waited too long to cut interest rates which are at a 23-year high.
Further Reading
S&P 500, Nasdaq Sink To Lowest Levels Since May As Crash Fears Linger (Forbes)
US Stock Futures Slump, Asian Stocks Routed Amid Recession Fears (Forbes)
Read More: Japanese Stocks Lead Asian Market Rebound After Monday’s Rout
