World stocks rally after Japan’s Nikkei jumps 7.2 percent

At 0138 GMT, the Nikkei rose 0.4 percent to 16,087.68 after falling to as low as 15,809.58 earlier.

People walk by an electronic stock board of a securities firm in Tokyo, Monday, Feb. 15, 2016.

(AP Photo/Koji Sasahara). A man walks by an electronic stock board of a securities firm in Tokyo, Monday, Feb. 15, 2016.

A strong yen makes Japanese exports less completive on the global markets and this was cited as one of the key reason for the sharp sell-offs in Japanese shares last week.

Japan’s benchmark Nikkei 225 index added 0.2 percent to 16,054.43 after soaring 7.2 percent the day before, which was its biggest daily gain since September.

Stocks began rallying after government data showed Japan’s economy shrank 1.4 percent on an annualized basis last quarter because of weak consumer demand and slower exports.

QUOTEWORTHY: “Together with the recent slump in the Nikkei and the appreciation of the yen, the case for additional easing remains compelling”, said Marcel Thieliant of Capital Economics.

In Japan, the Bank of Japan started implementing negative interest rates on Tuesday. “Solid US data is also improving investor sentiment given that they are counting on US growth to lead the global economy”, said Hirokazu Kabeya, chief global strategist at Daiwa Securities.

Comments from the People’s Bank of China (PBOC) governor sent the yuan to its strongest level against the dollar for the year, with the dollar-yuan pair at 6.4943 at yesterday’s market close.

Though the gains follow a strong showing last Friday, few market watchers are willing to say that there’s an underlying improvement in sentiment following weeks of turmoil that have sent many stock indexes into bear market territory.

Banks Deutsche Bank, Commerzbank, Credit Agricole, Credit Suisse and Societe Generale climbed 2-6% on reports that the European Central Bank is mulling buying re-bundled non-performing loans of Italian banks as part of its asset-purchase program. Britain’s FTSE 100 rose 2 percent to 5,819.92. “Also, U.S. shares rallied and we have China’s market back on today”.

Having fallen more than 1 percent on Monday, the yen gained half a percent, trading at 114.08 (JPY=) against the dollar. The benchmark Kospi closed 26.92 points or 1.47 percent higher at 1,862.20, snapping a two-session losing streak. Taiwan’s benchmark was down slightly while markets in Southeast Asia gained. The Shanghai Composite Index in mainland China surged 3.3 percent to 2,836.57 and Australia’s S&P/ASX 200 was up 1.4 percent to 4,910.00. Exports fell 11 percent while imports slid by almost a fifth, according to customs data, highlighting persistent weakness in the world’s second biggest economy.

USA oil prices jumped back above $30 a barrel late on Monday as news of a rare private meeting of top officials from the world’s biggest oil producers spurred speculation of an eventual deal to tackle a deep supply glut.

On Wall Street, a 12 percent rise in oil prices, solid retail sales data and some encouraging earnings news helped shares end sharply higher on Friday. Brent crude, a benchmark for worldwide oils, added $1.11 to $34.50 a barrel in London.