Nikkei sees biggest gain one day after biggest drop

Global stock markets generally ushered in a rally on Aug. 6, reversing some of the previous day's decline, after U.S. central bank officials made all the right rhetoric to appease investor tensions The Economic Index soared more than 10%, the biggest gain in a single day. The index plunged 12.4 percent the previous trading day, its biggest single-day decline since the 1987 Black Monday crash.

U.S. Wall Street also looks more stable, with S&P 500 futures up 1 percent, Nasdaq futures up 1.4 percent and Europe's Stoxx 600 up 0.7 percent, regaining some stability after falling 2.2 percent on Monday.

The S&P 500 fell 3 percent and the Nasdaq 3.43 percent on Monday, extending a recent wave of selling as concerns about a possible U.S. recession sent global markets into panic.

“If you wake up in the morning and find the Japanese stock market down 10%-12%, the most sane people in the world would be scared out of their wits, so it’s understandable for people to run away,” said Chris Beauchamp, chief market strategist at IG. “On the other hand , I think people got a little carried away yesterday, when it always looked very dramatic,” he said. "It's normal to have weakness at this time of year. The question is - is this enough to reset the market or is there more to come?"

Fed officials tried to appease the market, with San Francisco Federal Reserve Chair Mary Daly saying it was “extremely important” to prevent the labor market from falling into a downturn. Daley said she was open to rate cuts if necessary and that policy needed to be proactive.

Matt Simpson, senior market analyst at City Index in Brisbane, Australia, said: “The Nikkei is recovering from Monday’s plunge, with Fed Daley’s comments and a stronger-than-expected ISM services report Alleviating concerns about a panic rate cut by the Fed next week." "But that's not exactly a rebound from the risk. We're not yet sure if it's just a respite between waterboarding, or if there's more to come of pain.”

“Measuring the bottom of this historic sell-off is complex, and investors are likely to remain cautious before putting their funds back into the stock market,” said Boris Kovacevic, global macro strategist at payments firm Convera in Austria.

Market expectations for the Fed to cut interest rates by 50 basis points at its September meeting remained unchanged, with futures suggesting a 71% likelihood of a larger rate cut. The market expects to implement an easing policy of about 100 basis points this year and a similar magnitude in 2025.

(Compiled by Jimin Wang)

(Editor in charge: Jiang Qiming)

(Article source: New Sancai compiled first release)