European and Asian stocks recovered further and the Japanese yen slid against the dollar on Wednesday with markets volatility taking centre stage.
After Monday’s collapse that saw trillions of dollars wiped off equity valuations globally, traders have been picking up bargains, with Wall Street ending higher Tuesday.
In foreign exchange, the yen slumped nearly two percent against the dollar Wednesday after the Bank of Japan sought to ease fears that it would keep raising interest rates.
Oil prices jumped about 1.5 percent on Middle East tensions and supply constraints in Libya, having fallen at the start of the week.
“The current (rollercoaster) situation may continue for some time,” noted Asset Management One.
“The increased market volatility shouldn’t be ignored,” it added.
Investors were sent scurrying after data released on Friday showed that the US economy created far fewer jobs than expected in July, fanning recession fears.
That came soon after the Federal Reserve hinted at a September interest-rate cut and following a hike to borrowing costs by the Bank of Japan for only the second time in 17 years — sending shivers through financial markets as the yen jumped in value.
However, BoJ deputy governor Shinichi Uchida on Wednesday indicated that would be it for now given market volatility, sparking a big drop in the yen, while the Tokyo stock market closed up 1.2 percent.
Investors were jittery after Japan’s Nikkei stocks index surged more than 10 percent on Tuesday, a day after tanking more than 12 percent.
One dollar bought 147 yen Wednesday, compared with 142 at the start of the week.
While relative calm has returned to trading floors, observers warned investors to remain wary.
“Turnaround Tuesday truly lived up to its name with the dramatic surge in Japanese stocks” after Monday’s plunge, said independent analyst Stephen Innes.
“This volatility is typical of more prolonged and chaotic market downturns, which could prompt investors to adopt a cautious stance, hold on tight, and keep the antacids ready,” he added in his Dark Side Of The Boom newsletter.
– Key figures around 1100 GMT –
London – FTSE 100: UP 1.1 percent at 8,111.73 points
Paris – CAC 40: UP 1.7 percent at 7,250.85
Frankfurt – DAX: UP 1.4 percent at 17,592.93
Euro STOXX 50: UP 1.8 percent at 4,656.78
Tokyo – Nikkei 225: UP 1.2 percent at 35,089.62 (close)
Hong Kong – Hang Seng Index: UP 1.4 percent at 16,877.86 (close)
Shanghai – Composite: UP 0.1 percent at 2,869.83 (close)
New York – Dow: UP 0.8 percent at 38,997.66 (close)
Dollar/yen: UP at 147.28 yen from 144.68 yen on Tuesday
Euro/dollar: DOWN at $1.0920 from $1.0933
Pound/dollar: UP at $1.2717 from $1.2691
Euro/pound: DOWN at 85.87 pence from 86.12 pence
Brent North Sea Crude: UP 1.5 percent at $77.63 per barrel
West Texas Intermediate: UP 1.6 percent at $74.34 per barrel
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