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Global markets surge as Japan’s Nikkei posts biggest gain since 2008

Global stocks surged Wednesday as Japan’s Nikkei 225 index staged a spectacular comeback – rising 7.7 percent, its biggest gain since the aftermath of the 2008 Lehman Brothers bankruptcy. The Nikkei closed at 18,770.51, its biggest one-day rise in percentage since October 2008 amid speculation a selloff that drove valuations to an 11-month low was overdone. Global stocks rallied, led by the biggest jump for Japanese shares, after weak economic data out of China bolstered hopes of more stimulus measures from the Chinese government. Asian stocks soared, as investors’ confidence got a boost from the strong rally in offshore markets. In Europe, equity markets closed more than 1 percent higher, followed by positive data out of the region.

Stock markets have been volatile over the past several weeks as investors pinned their hopes on gauging the impact of China’s slowing economy on global growth. But investor sentiment eased Wednesday following an announcement from China’s finance ministry on Tuesday evening that the country would roll out a “more forceful” fiscal policy to counter the slowing economy. The Federal Reserve remains in focus before next week’s meeting with odds favoring a possible hold off raising interest rates by the end of this month.

The pan-European Stoxx 600 was up by 1.8 percent in early trade. U.S. stock futures pointed to 1.1 percent opening gains for the Dow Jones Industrial Average and the S&P500. The Shanghai Composite Index in mainland China ended up 2.9 percent. The huge jump in Japan filtered through to European indexes, with Britain’s FTSE 100 and Germany’s DAX seeing 2 percent gains. The broader Topix index rose 6.4 percent for its best session since a 6.6 percent gain in March 2011, after the Tohoku earthquake and tsunami. France’s CAC40 was up 2 percent in early trade.

Brokerages were among the biggest gainers on the Topix, with Nomura Holdings Inc. soaring 8.7 percent. Fast Retailing Co. jumped 10 percent to be the biggest boost to the Nikkei 225. Fuji Heavy Industries Ltd. soared 9.7 percent after the Nikkei newspaper reported that the maker of Subaru cars is considering a dividend increase. Murata Manufacturing Co. jumped 9.1 percent, leading Apple Inc. suppliers higher ahead of the Apple’s big iPhone 6S event, touted as the biggest launch in its history.

Among China’s other indexes, the blue-chip CSI300 Index closed 2 percent and the smaller Shenzhen Composite advanced 3.3 percent. Hong Kong’s Hang Seng Index jumped 4.1 percent to its highest level since August, with Cheung Kong Infrastructure Holdings up 4.3 percent following the news that the infrastructure arm of Li Ka-shing’s conglomerate is planning to buy the rest of Power Assets Holding for $11.6bn in stocks. Shares of Power Assets went up 6 percent. Benchmark gauges in India, South Africa, Egypt, Poland and Saudi Arabia rose more than 1.2 percent.

Emerging market currencies, which have been battered since China growth fears sharpened, fueled by gains Wednesday. The Russian ruble rose 1.2 percent against the U.S. dollar, the Turkish lira was up 0.2 percent, and the South African rand 0.7 percent. The euro fell 0.3 percent against the buck to $1.1180. The dollar rose 0.6 percent against the Japanese yen.

The yield on haven 10-year U.S. Treasury jumped three basis points to 2.22 percent, following a six basis-point increase on Tuesday. The U.S. will auction $21bn of 10-year debt on Wednesday and then $13bn of 30-year securities Thursday. Bent crude oil was up 0.9 percent at $49.96 per barrel, while gold was largely flat at $1120.90 an ounce.

Meanwhile, the National Development and Reform Commission (NDRC) approved two railway projects on Tuesday worth together almost 70bn yuan ($11bn), the latest fiscal measure to support infrastructure projects to recuperate the sputtering growth.

Back in China, premier Li Keqiang has declared that the country has succeeded in fighting off “potential systematic financial risks”. He told a panel at the ‘Summer Davos’, in the port city of Dalian, that recent measures taken to calm market instability had worked.

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