Japanese stocks rebounded sharply on Tuesday, with the Nikkei 225 and Topix having dropped over 12% in the previous session. Most other Asia-Pacific markets also showed gains.

 

The Nikkei 225, which experienced its largest loss since the Black Monday crash of 1987 in the prior session, along with the broad-based Topix, both gained over 9%.

 

The Nikkei closed up 10.23% at 34,675.46, marking its largest daily gain since October 2008 and a record single-day jump in index points. The Topix ended up 9.3% at 2,434.21.

 

Both indexes reclaimed positive territory for the year thus far with these rallies.

 

On July 30, the Bank of Japan raised interest rates to their highest level since 2008, which strengthened the yen to a seven-month high and pressured stocks.

 

Global markets were also unsettled by fears of a U.S. recession, sparked by a weaker-than-expected jobs report and the unwinding of the yen 'carry trade.'

 

Major Japanese trading houses rebounded, closing with gains upwards of 5%. Mitsui surged 10.43% and Softbank Group Corp jumped 12.06%.

 

Other sectors witnessing rallies included Japanese automakers and semiconductor suppliers, such as Suzuki Motor and Renesas Electronics, which rose 17.01% and 19.06%, respectively.

 

The yen weakened by 1.45%, trading at 145.6 against the U.S. dollar.

 

South Korea's Kospi jumped 3.3% to close at 2,522.15, while the small-cap Kosdaq rose 6.02% to 732.87. South Korean markets were temporarily halted Monday after an 8% drop triggered circuit breakers.

 

South Korean heavyweight Samsung Electronics increased by 1.54%, and chipmaker SK Hynix climbed 4.87%.

 

Mainland China’s CSI 300 ended flat at 3,342.98, and Hong Kong's Hang Seng index saw little change as trading approached its final hour.

 

Australia's S&P/ASX 200 closed 0.41% higher at 7,680.6.

 

Oil prices increased as Brent crude rose 0.89% to $76.98 per barrel, and U.S. West Texas Intermediate crude went up 0.84% to $73.78.

 

Japan’s household spending in June fell by 1.4% year-over-year in real terms, which was larger than expected. Average monthly household income rose 3.1% in real terms from last year.

 

Real wages in Japan grew by 1.1% in June compared to a year earlier, marking the first increase in 26 months. This wage growth gives the Bank of Japan more room to tighten monetary policy.

 

The Reserve Bank of Australia kept its cash rate steady at 4.35% on Tuesday, as economists expected. The bank noted that inflation had stayed above the midpoint of its target for 11 consecutive quarters and that the economic outlook for Australia remained uncertain.

 

The RBA slightly upgraded its GDP growth forecast for the year ending December to 1.7%, up from 1.6% in May. Meanwhile, the CPI projection was lowered to 3.0% for the year ending December, compared to a previous expectation of 3.8%.

 

Overnight in the U.S., the Dow and S&P 500 had their worst sessions since September 2022.

 

The Dow fell 1,033.99 points, ending 2.6% lower, while the S&P 500 dipped 3%. The Nasdaq Composite dropped 3.43%, ending 15% below its recent peak.