Nikkei Rallies Sharply After Historic Plunge

Japanese stocks experienced a significant rebound early Tuesday following their steepest decline since 1987's Black Monday. The Nikkei surged 8.1% while the Topix climbed 8.57%. Concerns over global market declines, U.S. recession threats, and unwinding investments contributed to Monday's drastic drop.

Japanese stocks rebounded sharply in early trade on Tuesday, following their most significant single-day rout since the 1987 Black Monday sell-off in the preceding session.

The Nikkei soared 8.1% to 34,004.22 by 0026 GMT, while the broader Topix index climbed 8.57%. The Nikkei had plummeted 12.4% on Monday, marking its worst performance since the October 1987 crash. This turmoil was driven by last week's plunge in global stock markets, concerns over a potential U.S. recession, and fears that investments financed by a cheap yen were being unwound.

Stephen Dover, chief market strategist and head of Franklin Templeton Institute at Franklin Templeton, noted that Monday's collapse underscored the impossibility of diversifying equity risk by region, sector, or style during major corrections or bear markets. He added that while opportunities would emerge, it was still too early to re-enter the market.

(With inputs from agencies.)