The Tokyo stock market was turbulent on Wednesday, as the benchmark Nikkei 225 index finished at 35,489.62, up 414.16 from yesterday’s closing. Early trade hours saw the index really drop by more than 900 points. Later in the day, though, there was a clear turn around as the index jumped by more than 1,100 points at one point as investors grabbed the chance to buy stocks that had lost value.
Following a period of market uncertainty, these strong swings were mostly driven by a range of elements, including global economic issues and profit-taking actions. “The Tokyo market has been influenced by actions in other markets, especially due to concerns over the resurgence of COVID-19 and its impact on the global economy,” analyst Chieko Shiori of ABC Securities said, stressing the part played by outside forces.
A report from the Japan Center for Economic Research earlier this week stressed the possible hazards to the Japanese economy, further adding to the market volatility. The paper highlighted the possible effects of continuous disturbances in the supply chains, as well as the influence of more government rules on different sectors.
Market analysts think that bargain hunting by investors who saw the decline in stock prices as a chance to enter or increase their holdings contributed largely to the comeback observed on Wednesday. “Investors are using reduced prices to build their portfolios, as they anticipate a recovery in the market in the long run,” strategist Makoto Suzuki of XYZ Asset Management said.
Investors are cautious, however, given the ongoing uncertainty about the state of the economy. Portfolio manager Hideaki Hirabayashi of XYZ Bank underlined the importance of a thorough awareness of the matter, saying, “Although we have witnessed a resurgence today, it is vital to realize that the market remains subject to oscillations. Investors must keep a careful eye on changes in several areas and modify their plans accordingly.
The Tokyo stock market’s behavior is not a single occurrence, but rather a result of movements in the world market. Emphasizing the link between the global markets, ABC Consulting economist Yoshiro Tanaka said, “Stock markets around the world often react to one another, as investors across different countries follow similar trends and considerations.”
