APAC Stock Markets Recover from Last Week’s Losses

Asia-Pacific (APAC) stock markets recovered from last week’s losses, with the Japanese market leading in front. What about Europe and the U.S.?

Japan’s Nikkei 225 index rose 3.45% to close at 36,232.51 points. The most prominent market index in the country, Nikkei 225, crossed the 36K-level for the first time since 2 August. Another leading Japanese index, the Tokyo Stock Price Index (TOPIX), also climbed 2.83% to close at 2,553.55 points today.

On 5 August, both the indices saw their worst performance since the 1987 stock market crash. The recent uptrend is supported by the performance of tech and finance stocks. South Korea’s Korea Composite Stock Price Index (KOSPI) rose a modest 0.12% to 2,621.50 points. The index had fallen 9.3% on 5 August. In fact, South Korea had to temporarily halt its markets on the day, triggering circuit breakers.

The Taiwan Weighted Index (TWII) also rose 0.11% to 21,796.57 points today. It had fallen 8.4% on 5 August. China’s CSI 300 rose 0.36% to close at 3,334.39 points today. Though it didn’t get affected that much from the global market crash last week, the index is struggling to see an uptick.

European markets were higher today, as they had already started recovering over the last week. The STOXX Europe 600, a regional benchmark index of European stocks, rose 0.04% to 499.33 points today. The index had dropped 3.5% on 5 August, its lowest point in over six months.

For the United States, last week proved to be drastic for its markets. Just yesterday, we had plenty of movement, including:

• The S&P 500 index rose 0.23% to close at 5,344.39 points.
 

• The Nasdaq Composite (NASDAQ) index rose 0.21% to close at 16,780.61 points.
 

• The Dow Jones Industrial Average (DJIA) index, on the other hand, fell 0.36% to close at 39,357.01 points.  

Below is a quick recap of what happened on 5 August, which triggered the global market crash:

• Japan’s central bank hiked its benchmark interest rates from the previous range of 0%-0.1% to 0.25% last week, the highest since the global financial crisis (GFC) during 2007-09.

• The move strengthened yen, the Japanese currency which triggered an unwinding of the carry trade. Investors borrow cheaply in yen to invest in higher-yielding assets in carry trade.  

• Around the same time, the U.S. government released its employment report that intensified global fear about the U.S. economy entering a long recession.

Now, all eyes are fixed on the U.S. as it will release its Producer Price Index (PPI) and Consumer Price Index (CPI) data later today and tomorrow. If the data is not too negative, we expect the global markets to remain in the green. Otherwise, trouble will continue for quite some time.