What a difference a day makes! Some 24 hour ago, the financial markets were in retreat – now, they’re bouncing back. After its biggest crash since 1987 on Monday, Japan’s Nikkei index has rebounded strongly today. The Nikkei has just closed around 9% higher, after a day of strong buying activity, recovering much of yesterday’s 12.4% slump. South Korea’s KOSPI index is 3.7% higher, while Australia’s S&P/ASX 200 is up a modest 0.4%. Jim Reid, strategist at Deutsche Bank, calls it “a turbocharged turnaround Tuesday in Asia”, telling clients jovially: "On certain measures, yesterday was the wildest day of my 29-year career and will make the rides I’m going on at Disney Land Paris this time next week seem a bit like the toddler rides at Peppa Pig World by comparison." The future market predict indicate European markets, and Wall Street, will recover ground today too. The UK’s FTSE 100 index is being called up around 1%, after dropping 2% yesterday. The recent stock wobble has been blamed on several factors, including concerns that a US recession is approaching. Those fears were eased somewhat by strong service sector data yesterday, showing a rebound in new orders. Another factor is the end of the cheap money era, after the Bank of Japan lifted interest rates last week, squeezing the ‘yen carry trade’ under which investors borrowed yen cheaply to spend on other assets. Chicago Fed Bank president Austan Goolsbee made an effort to calm markets yesterday, telling CNBC that it is “not looking yet like recession”, despite Friday’s slowdown in job creation. That didn’t prevent Wall Street suffering worst day in nearly two years. Today’s calm could be due to a stabilisation in the yen. It is trading around ¥145/$ – having surged from ¥160/$ in early July to ¥141/$ yesterday. Traders will be looking for signs that policymakers will respond to concerns over economic growth, such as by cutting US interest rates. The agenda • 7am BST: German factory orders for June • 8.30am BST: Eurozone construction PMI for July • 9.30am BST: UK construction PMI for July • 1.30pm BST: US trade data for June • 3.10pm BST: RealClearMarkets/TIPP index of US economic optimism We’ll be tracking all the main events throughout the day ...
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