Japan’s stock market on Tuesday surged to its highest level in nearly two weeks, erasing the losses suffered during the August 5th plunge that rattled equities worldwide.
The Nikkei 225 index returned from Monday’s holiday to jump 3.45%, recovering the 36,000 mark as a weakening yen boosted exporters and investors welcomed rallies in Europe and the U.S.
The Nikkei had crashed 12% to 31,458 on the previous Monday after concerns about a faltering U.S. economy and fears technology stocks were overvalued created a risk-averse mood across global bourses.
The sell-off was exacerbated by a sharp rally in the Japanese yen, which is believed to have triggered a scramble to close so-called carry trades — selling the yen to buy other assets — and which in turn forced traders to liquidate long positions in stocks.
The rebound in the Nikkei 225 since than has been helped by the yen weakening afresh after Bank of Japan officials stressed the central bank would be unlikely to raise interest rates again when markets were in such turmoil.
The yen strengthened to below 142 versus the U.S. dollar on August 5, but by August 13 was trading around 148.
“The recent sharp moves in the yen have subsided for now, boosting exporters generally and the main index in particular,” said Richard Hunter, head of markets at Interactive Investor.
“The Nikkei has managed to regain a positive performance so far this year which equates to almost 9%, having recovered from the violent swings of last week,” he added.
The Nikkei 225 remains about 13% below the record achieved in July.
