The dovish comments from the Bank of Japan can be described as a "tonic"! Asian stock markets collectively celebrate as the Japanese stock market goes from the ICU to the KTV

According to the Zhitong Finance and Economics APP, following the global stock market crash on Monday, the Bank of Japan stated that it would not raise interest rates if the financial markets were unstable. Subsequently, Asian stock markets rose for the second consecutive trading day.

On Wednesday, the MSCI Asia-Pacific Index surged by as much as 1.8%. Following the violent surge on Tuesday, the Japanese stock market continued to soar on Wednesday. The TOPIX index in Japan rose by 4.3% at one point, and the Nikkei 225 index rose by over 3%, nearly recovering from the drastic decline set on "Black Monday." Previously, Bank of Japan Deputy Governor Shinichi Uchida personally stepped in to stabilize investor sentiment. He pointed out on Wednesday that the recent volatility in the Japanese market is significant, and if the policy outlook is affected, the Bank of Japan's interest rate policy path will change. Benchmark stock indices in South Korea and Taiwan also saw significant increases.

Uchida stated that the recent market trends are "extremely unstable," and the central bank needs to temporarily maintain loose monetary policy. He also mentioned that the Bank of Japan will not raise interest rates when the market is unstable. This latest statement from the Bank of Japan's Deputy Governor contradicts the central bank's tough stance from last week. Uchida's remarks indicate that the Bank of Japan is clearly concerned about the global impact of the recent significant fluctuations in the Japanese stock market.

Furthermore, with concerns easing over further unwinding of yen carry trades, the yen fell by over 2% against the US dollar, with tech stocks leading the entire region. However, some market observers remain cautious.

Asian stock markets rose for the second consecutive trading day

Due to recent speculation that the Bank of Japan's tightening monetary policy seemed to trigger a historic plunge in the Japanese stock market and led to global market turmoil, the central bank is facing public pressure. The benchmark TOPIX index experienced record declines for two consecutive days before rebounding on Tuesday, leading the global stock market crash on Monday. The main reason was investors' concerns that further rate hikes by the Bank of Japan could harm Japan's fragile economic recovery and the yen's appreciation could severely impact major exporters like Toyota.

Charu Chanana, Head of Foreign Exchange Strategy at Shengbao Bank, stated that Uchida's comments "may bring some stability to the Japanese stock market for now, but cannot alleviate people's concerns about a US economic recession." "In this environment of increased volatility and market nervousness about the US economy, it remains challenging to engage in new carry trades."

Global stock markets plummeted on Monday, with weak US employment reports exacerbating concerns that the Federal Reserve's interest rate policy could further slow down the economy. The Bank of Japan's rate hike pushed the yen higher, stimulating a reversal in carry trades. Investors will closely monitor the US initial jobless claims data scheduled to be released on Thursday to assess the health of the US economy