Japan’s stock market rally fades as fear returns

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A comeback rally in Japanese stocks has quickly lost steam, as the specter of a US economic slowdown and further yen volatility cast a long shadow across financial markets.

A comeback rally in Japanese stocks has quickly lost steam, as the specter of a US economic slowdown and further yen volatility cast a long shadow across global financial markets. The Nikkei 225 ended down 0.7% on Thursday, snapping a two-day winning streak. Meanwhile, the yen strengthened 0.6% to 146 against the US dollar, after losing nearly 2% on Tuesday and Wednesday combined.

“The potential for a broader US economic slowdown, misaligned global monetary policies and the bubbling geopolitical tensions in the Middle East cast long, ominous shadows across financial markets,” said Stephen Innes, managing partner of SPI Asset Management. The volatility in the yen, which was at the heart of recent market turmoil, remains elevated, he added. On Monday, the Nikkei plummeted by the most since 1987, sparking a broader global market sell-off.

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