Tokyo, Aug 25: Tokyo's benchmark index rebounded sharply this morning as a measure of calm returned to the market after five days of falls driven by fears Chinese growth is stalling. The Nikkei 225 at the Tokyo Stock Exchange, which plunged more than four per cent at the open, added 1.10 per cent, or 204.22 points, to sit at 18,744.90 by the break.
The broader Topic index of all first-section shares jumped 1.46 per cent, or 21.66 points, to 1,502.53, also clawing back big losses. The Nikkei yesterday plunged more than four per cent to close at a six-month low. Tokyo investors pressed the sell button again after the opening bell today, but late morning bargain buying helped push stocks back into the black as other Asian markets also recovered.
"Valuations have gotten quite cheap and technically speaking we've seen a very significant selloff," Toshihiko Matsuno, chief strategist at SMBC Friend Securities, told Bloomberg News. David McDonald, an investment strategist at Credit Suisse Group AG's wealth management and private banking unit, said markets were taking a better look at the state of the world economy after Monday's free fall in world equities.
"Our bottom line is that the world's still not a bad place," he told Bloomberg News. The view was echoed by the government, with top spokesman Yoshihide Suga describing the Japanese economy as "on a gradual recovery trend".
Still, the government is "carefully" monitoring markets, he said, adding that it is "in constant communications with other members of the Group of Seven, and will take necessary actions when necessary".
Tokyo stocks got a boost as the dollar recovered some ground against the yen, with the greenback fetching 119.83 yen, up from 118.51 yen in New York trade Monday. A weaker yen is a plus for the profitability of Japanese exporters. Toyota shares jumped 1.89 per cent to 7,126 yen, Sony bounced 5.26 per cent to 2,993 yen while market heavyweight Fast Retailing, operator of the Uniqlo chain, ticked up 0.04 per cent to 50,920 yen. The latest global sell-off stemmed from increasing worries that China's slowing growth might drag down the world economy.