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China News Service, August 6: Japanese stocks rebounded sharply after a historic plunge on the 6th. The Nikkei 225 index rose by more than 3,200 points during the session, regaining the 34,000 point mark. Tokyo Electron rose by nearly 18%, and Hitachi and Mitsubishi UFJ Financial rose by more than 14%. As of press time, the Nikkei 225 index was at 34,653.21 points, with the increase expanding to 10.25%.

On the same day, the Japanese yen exchange rate against the US dollar rose by more than 1% during the session. As of press time, the increase narrowed to 0.66% to 145.12.

In comparison, the U.S. stock market showed signs of stabilization last night. On the 5th local time, affected by the record drop of Japanese stocks, the U.S. stock market fell into panic in the early trading. The Nasdaq fell by more than 6% at one point, the "star stock" Nvidia fell by more than 15% during the session, and Apple, with a total market value of more than 3 trillion US dollars, fell by nearly 11% during the session.

The U.S. stock market then stabilized and recovered. By the close, the Dow Jones Industrial Average fell 2.6%, the Nasdaq fell 3.43%, and the S&P 500 fell 3%. Large technology stocks such as Nvidia, Apple, Tesla, and Facebook saw their losses narrow significantly.

CNBC believes that the disappointing July employment report released by the United States last Friday and concerns about a U.S. recession are the main reasons for the collapse of global stock markets. The Federal Reserve recently chose to keep interest rates unchanged at the highest level in 20 years, and the market is worried that the Fed is too slow to cut interest rates to ease the economic slowdown.

On the evening of the 5th, the US ISM non-manufacturing PMI in July rose to 51.4% from 48.8% in June, exceeding expectations, providing some positive economic news to ease concerns about a recession.

Some institutions believe that the rise in the US unemployment rate in July is not too pessimistic. Shenwan Hongyuan Research said that the weakening of US non-farm payrolls was mainly due to temporary factors, so it is not too pessimistic. In July, non-farm payrolls increased by 114,000, while the market expected 175,000. Temporary layoffs contributed more than half of the increase in the unemployment rate in July, which may be affected by Hurricane Beryl.

Some market views call the global stock market crash a "perfect storm." John Belton, portfolio manager of Gabelli Funds, said, "This is a perfect storm of slowing economic growth, crowded positions and risk aversion peaking at the same time."

According to Kyodo News on the evening of the 5th, Japan's Chief Cabinet Secretary Yoshimasa Hayashi said in an interview at the Prime Minister's Office on the 5th regarding the sharp drop in the Nikkei index in the Tokyo stock market: "It is important for the government to make calm judgments. We will pay attention to the trends in the economic and financial markets to ensure that economic and fiscal operations are foolproof."

Hayashi Yoshimasa said that the Financial Services Agency is monitoring and analyzing market trends and improving the coordination within the government. Regarding the appreciation of the yen against the dollar, Hayashi Yoshimasa said, "It is important that the exchange rate reflects the fundamentals and moves steadily. The government will pay close attention to the exchange market trends."

Previously, some institutions mentioned that the carry transaction of the Japanese yen as a financing currency has started to reverse and is bearish for the equity market.

Huatai Securities Research Report believes that the Bank of Japan's interest rate hike has triggered investors to unwind yen carry trades in the foreign exchange market, causing the yen-dollar exchange rate to rise rapidly from 162 in early July to 149 in early August. Japanese technology companies have a high proportion of overseas business, and exchange rate fluctuations have a greater impact on their profits. Industrial Bank Research believes that this round of carry trades using the yen as a financing currency has begun to reverse, and the reversal of carry trades is bearish for the equity market.

Huatai Securities said that compared with previous arbitrage transactions, the net short positions of yen in this round have dropped significantly, and Japanese stocks have retreated significantly, but the appreciation of the yen is relatively mild compared with the historical range. From the perspective of the proportion of Japanese institutional holdings in the stock, Australian, Dutch, French government bonds, and US MBS all account for a high proportion. If the deleveraging of yen arbitrage transactions continues, it will also impact the interest rate bond and credit bond markets of some countries.

The agency said that before this round of rapid appreciation of the yen and the sharp adjustment of the Japanese market, the Japanese economy was in the reflation channel, and there were signs of accelerated domestic demand growth. However, if the yen appreciates too quickly and the Japanese stock market falls too quickly, causing a sharp tightening of financial conditions, the reflation momentum may also be negatively affected. If the Japanese government can intervene in time to block the "negative feedback" mechanism of the market and maintain relatively loose monetary and fiscal policies, Japan is still expected to continue its mild reflation trend. (China News Service APP)

　　(The views in this article are for reference only and do not constitute investment advice. Investment is risky and you should be cautious when entering the market.)