Premarket: Stocks rebound continues, yen slumps after BOJ talks down rate hikes

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Nikkei’s 1.2% rise followed Tuesday’s 10% rally, suggesting investors were finding their footing

European and Asian share markets rose on Wednesday, led by another bounce in the Nikkei, as the Bank of Japan unexpectedly turned cautious on rate hikes amidst market volatility, inducing a sharp fall in the yen.

Sentiment had looked a little shaky early in Asia, but Bank of Japan Deputy Governor Shinichi Uchida said in a speech to business leaders the central bank will not raise interest rates when financial markets are unstable, boosting risk assets. And the sense is building across investors and analysts that the swings in markets, which reached their peak on Monday when global share benchmarks plunged, do not prefigure more sustained moves.

“From here I think we start to reverse some of those moves though not in full, I don’t think you’re going to see dollar/yen back at the highs at which it was.” Futures now imply 105 basis points of easing this year, compared with 125 basis points at one stage during Monday’s turmoil, while a 50-basis-point cut in September was seen as a 73% chance.

 

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