Asia stocks gain, yen falls after Japan says it won’t raise rates when markets unstable; STI up 1.4%

TOKYO – Shares in Asia rose, with Japan erasing recent massive losses as the yen weakened after Bank of Japan deputy governor Shinichi Uchida said the central bank will not raise rates when the market is unstable.

The Nikkei 225 index rose as much as 3.2 per cent, while the broader Topix climbed almost 4 per cent.

The yen dropped 1.6 per cent to 146.65 yen per US dollar, away from the high of 141.675 yen it hit on Aug 5, though it remains far above its July low of 161.96.

Singapore’s Straits Times Index (STI) was up 1.4 per cent as at 10.05am local time.

South Korea’s Kospi index rallied 2.4 per cent, led by chipmaker Samsung Electronics, which jumped following a Reuters report that its memory chips passed Nvidia’s test for use.

Elsewhere in Asia, Hong Kong’s Hang Seng Index gained 1.4 per cent and Australia’s S&P/ASX200 was up 0.4 per cent.

“The sell-off in Japanese stocks may almost be over,” said analysts at JPMorgan in a note. “Both non-resident and individual investors have reset their year-to-date net buying.”

“If the market stays at its current level, the GPIF (government pension fund) could become a net buyer by end-September and a view that unwinding of yen carry trades is almost over has also emerged.”

The GPIF is a massive fund with considerable market power, and its investment decisions are highly influential.

The unravelling of the

yen carry trade

– where investors borrow yen at low rates to buy higher yielding assets – was a driving force in the market rout, but again seemed to be stabilising.

After Wall Street bounced overnight, Nasdaq futures rose 0.6 per cent despite a 12 per cent dive in artificial intelligence darling Super Micro Computer after it missed earnings estimates.

S&P 500 futures were also up 0.3 per cent, while EuroStoxx 50 futures firmed 0.8 per cent. FTSE 100 futures added 1 per cent.

Still, the market remains unstable amid volatile conditions that sent the equity gauges into bear markets on Aug 5. The Nikkei’s implied volatility touched its highest level since 2008 at the start of the week. REUTERS