Asian Stock Market Continued To Show Gains, Yen Weakens As Calm Returns

In today’s trading, Asian markets showed strong gains, with the Japanese shares rebounding from losses earlier this week after a central bank official downplayed the potential of an imminent interest rate hike.

The Nikkei 225 went up by 3%, recovering from an earlier 2.5% decline, spurred by new comments from Shinichi Uchida, deputy governor of the Bank of Japan. 

“As for the future conduct of monetary policy, in a nutshell, I believe that the Bank needs to maintain monetary easing with the current policy interest rate for the time being, given the extreme volatility in financial and capital markets both domestically and internationally,” Uchida stated in a speech. 

He noted that the yen has recently “strengthened significantly against the US dollar, as large positions built on a weaker yen are being unwound.”

In addition, partly due to the correction of the yen’s depreciation, stock prices in Japan have declined more sharply than in other economies. 

Investors were alarmed after a data release on Friday showing that the US economy created far fewer jobs than expected in July, stoking recession fears. 

This followed the Federal Reserve hinting at a September interest rate cut, just hours after the Bank of Japan raised rates for the second time in 17 years, which sent shockwaves through financial markets.

Meanwhile, Tokyo’s Topix index, which covers a broader range of stocks than the Nikkei, made modest gains in today’s trading session. It is now firmly in positive territory, recently trading over 4% higher. 

Elsewhere in Asia, South Korea’s Kospi gained 2.4%, while Hong Kong’s Hang Seng index increased by 1.3%. Shanghai Composite slightly went up by 0.2%.