Japan's Nikkei 225 Rebounds 10%: BOJ Cuts Rates in Secret Midnight Operation

By Travis, Economic Analyst

Japan's Nikkei 225 index rebounded sharply on August 6, 2024, following a significant drop the previous day. The index soared by 10.5% early in the morning, recovering from a near-record 12.4% plunge. By late morning, it had risen 8.7% to 34,211.83, regaining much of its losses after dramatic declines on Wall Street.

The rebound came amid rumors that the Bank of Japan (BOJ) had secretly cut interest rates in a midnight operation to stabilize the market. While the BOJ has not officially confirmed these rumors, market analysts believe that the central bank may have taken this step to calm the market's nerves and prevent further panic selling.

The Nikkei 225's sharp rise was part of a broader rally in Asian markets, with the South Korean Kospi and Hong Kong's Hang Seng Index also posting significant gains. The rebound followed a day of sharp losses on Wall Street, which had not been on the same scale as the previous day's debacle in Tokyo.

The Nikkei is now close to the level it was at a year ago, with investors regaining some confidence in the market. However, the sudden rebound has raised questions about the sustainability of the recovery and whether it is merely a dead cat bounce.

Market analysts are closely watching the situation, with many expecting further volatility in the coming days. The BOJ's rumored rate cut has added a new layer of uncertainty to the market, and investors are eagerly awaiting more information about the central bank's intentions.

In the meantime, the rebound in the Nikkei 225 has provided some relief to investors who had been battered by the market's recent turbulence. However, many remain cautious, aware that the market's recovery may not be as smooth as it appears.