By STAN CHOE and ELAINE KURTENBACH

NEW YORK (AP) — Japan's benchmark Nikkei 225 index rose greater than 10 percent early Tuesday, a day after causing turmoil in Europe and on Wall Street. Other markets in Asia appear to have calmed down somewhat after the rollercoaster ride earlier within the week.

The frightening Monday began with a Crash abroad reminds of 1987 The crash that went all over the world and hit Wall Street with greater losses, than the fears a few Slowdown US Business.

The Nikkei rose nearly 11% early Tuesday but then fell back to shut 8.7% higher at 34,211.83 as investors snapped up bargains after the day past's 12.4% plunge.

On Monday, the S&P 500 lost 3 percent, its worst day in nearly two years. The Dow Jones Industrial Average tumbled 1,033 points, or 2.6 percent, while the Nasdaq Composite fell 3.4 percent as Apple, Nvidia and other Big Tech firms that were once the celebrities of the stock market continued to falter.

The declines were the most recent in a wave of world selling that began last week, and were the primary opportunity for traders in Tokyo to react to Friday's report that showed the U.S. Employers slowed their hiring rate last month by way more than economists expected. These were the most recent data on the US economy, which were weaker than expectedand all of it caused fear, the The US Federal Reserve has slowed the US economy for too long and an excessive amount of, through high Interest charges with hope for suffocating inflation.

Professional investors warned that some technical aspects could amplify the market movement and that declines could have been overdone, but losses were nonetheless staggering. South Korea's Kospi index plunged 8.8 percent and Bitcoin fell from over $61,000 on Friday to below $54,000.

Even gold, which has a status for providing safety in turbulent times, lost about 1 percent.

Elsewhere in Asia, Hong Kong's Hang Seng Index rose 1.1 percent to 16,876.98 early Tuesday and the Kospi jumped 3.5 percent to 2,526.20. Taiwan's Taiex rose 1.2 percent and in Australia the S&P/ASX 200 rose 0.3 percent to 7,675.90.

The Shanghai Composite Index, which was largely unaffected by the day past's drama, rose 0.2 percent to 2,865.06.

Monday's declines reflected fears that the damage to the economy from persistently high rates of interest is so great that the Federal Reserve may have to chop rates in an emergency meeting before making its next decision on Sept. 18. The yield on two-year U.S. Treasury notes, which closely tracks Fed expectations, briefly fell below 3.70 percent through the morning, after reaching 3.88 percent late Friday and 5 percent in April. It later recovered and fell back to three.89 percent.

“The Fed could come in on a white horse and save the day with a big rate cut, but the case for a rate cut between meetings seems flimsy,” said Brian Jacobsen, chief economist at Annex Wealth Management. “Those are usually reserved for emergencies like COVID, and an unemployment rate of 4.3% doesn't really seem like an emergency.”

Naturally, the US economy continues to be growingThe U.S. stock market continues to be up an honest amount for the 12 months, and a recession is much from certain. The Fed made clear the high-quality line it’s walking when it began sharp rate hikes in March 2022: An approach that was too aggressive would stall the economy, but an approach that was too soft would give inflation more respiratory room, hurting everyone.

Some of the recent declines on Wall Street may simply be air escaping from a stock market that has hit dozens of all-time highs this 12 months, partly resulting from a Hype about artificial intelligence Technology. Critics have been saying for a while that the stock market looks expensive after prices rose faster than corporate earnings.

“Markets tend to move up like they're climbing stairs and down like they're falling out of a window,” said JJ Kinahan, CEO of IG North America. He attributes much of the recent worry to waning enthusiasm around AI, increasing pressure on firms to indicate how AI can translate into profits, and “a market that got ahead of itself.”

The only solution to make stocks look cheaper is for prices to fall or for earnings to rise. Expectations for the latter remain high, with the S&P 500's earnings growth last quarter expected to be the strongest since 2021.

Professional investors also pointed to the Bank of Japan’s move last week, raise its key rate of interest from almost zeroWhile such a move helps strengthen the Japanese yen, it also causes traders to exit deals through which they borrowed money for virtually nothing in Japan and invested it elsewhere on this planet.

U.S. Treasury yields also pared losses on Monday after a report said growth within the U.S. services sector was barely stronger than expected. The growth was led by firms in the humanities, entertainment and leisure and accommodation and food services sectors, in keeping with the Institute for Supply Management.

Still, stocks of firms whose profits depend most on the strength of the economy suffered sharp losses on fears of a slowdown. Small-company stocks within the Russell 2000 Index fell 3.3 percent, erasing the recovery for this and other beaten-down areas of the market.

Making matters worse for Wall Street was the crash in stocks of major technology firms because the market's hottest commodity continued to falter for many of this 12 months. Apple, Nvidia and a handful of other stocks of major technology firms, often called ” The glory seven “ had helped the S&P 500 set one record after another this year, even as high interest rates weighed on much of the rest of the stock market.

But the dynamics of big technology companies have changed in the past month because investors have priced them too high and expectations for future growth have become too difficult to meet. A series of disappointing earnings reports, accompanied by updates from Tesla And alphabet Pessimism was further intensified and the decline accelerated.

Apple fell 4.8% on Monday after Warren Buffett’s Berkshire Hathaway announced that it reduced his ownership share from the iPhone manufacturer.

NVIDIAthe chip company that has become the poster child for Wall Street's AI boom fell even more, 6.4 percent. Analysts cut their earnings forecasts for the company over the weekend after a report from The Information said Nvidia's new AI chip was delayed. The recent sell-off has cut Nvidia's profit for the year to nearly 103 percent from 170 percent in mid-June.

Another Big Tech titan, Alphabet, fell 4.4% after a US court ruled that Google’s search engine illegally exploit his dominance to suppress competition and stifle innovation.

Overall, the S&P 500 fell 160.23 points to 5,186.33. The Dow fell 1,033.99 to 38,703.27 and the Nasdaq Composite plunged 576.08 to 16,200.08.

Concerns beyond corporate profits, interest rates and the economy are also weighing on the market. War between Israel and Hamas could worsen, which could lead to human casualties and also to sharp fluctuations in oil prices. This reinforces the broader concerns about potential Hot spots all over the world, while upcoming US elections could mess things up even more.

Wall Street is concerned about the impact November's policies could have on markets, but the sharp swings in stock prices could also have an impact on the election itself.

The threat of a recession is likely to put Vice President Kamala Harris on the defensive. But slowing growth could also further reduce inflation and force former President Donald Trump to shift his focus away from higher prices and instead outline ways to revive the economy.

“It's about jobs,” said Quincy Krosby, chief global strategist at LPL Financial. Jobs drive spending by U.S. consumers, who in turn make up the largest part of the U.S. economy.

“As election day approaches, the unemployment rate will play a very important role.”

___

AP business writers Matt Ott, Christopher Rugaber and Damian J. Troise contributed.

Originally published: August 5, 2024 at 19:13

April 2024 proved to be a busy month in Japanese-American diplomacy.

The month saw a state visit by Prime Minister Fumio Kishida to the USA That included a gathering on the White House with President Joe Biden on April 10. The next day, each men were joined by Philippine President Ferdinand Marcos Jr. for the meeting First-ever trilateral summit between the US, Japan and the Philippines.

Then on April 23, Taro Aso, former prime minister and leading figure in Japan's ruling Liberal Democratic Party, said: met with Donald Trump in New York.

As US-East Asian foreign relations expertI imagine the flurry of diplomatic activity points to 2 things: Japan's strong desire to extend engagement with Washington as a part of an Indo-Pacific strategy, and the very real concern in Tokyo that the U.S. will not be as engaged – regardless who will lead the country after this 12 months's election.

Allies and co-stewards

The Japanese government under Kishida – who was Elected Prime Minister in 2021 – has made it clear that they’re committed to an alliance with the USA

Kishida hopes to say Japan's role as greater than just that of the United States strongest ally in East Asia, but additionally as co-administrator of the “Liberal international order” – these are the worldwide rules and agreements established by leading economies after World War II.

Kishida's intentions became clear within the Japanese 12 months 2022 National Security Strategy, which detailed Japan's short- and medium-term strategic goals. While it included a commitment to unprecedented defense spending and the event of recent defense capabilities, it did so within the context of emphasizing the country's relationship with the U.S. as “the cornerstone of Japan's national security policy.”

Japan's strategy also calls for bilateral relations with the United States to transcend traditional security concerns and extend to providing economic security through efforts to strengthen the resilience of worldwide supply chains and strengthen economic engagement between allies.

Invest in alliances

Japan's desire to strengthen its partnership with the United States was largely reciprocated by Washington.

Closer ties are in keeping with those of the Biden administration plan to speculate in alliances as a core element of its foreign policy. The Biden White House was particularly in focus stronger security cooperation across the Indo-Pacific region.

To that end, Biden and Kishida unveiled a joint U.S.-Japan command center and a brand new Japan-U.S.-Australia air missile defense network during their April meeting. Likewise those trilateral meeting with the Philippines The US Coast Guard's improved training for its Asian partners in addition to joint patrols within the South China Sea were presented there.

While the implicit, if not explicit, goal of such collaborative efforts is usually that perceived threat from China The strategy has far-reaching geopolitical implications for regional stability.

By forging alliances between like-minded countries, the United States and Japan are promoting a worldwide system based on the prevailing liberal international order but emphasizing the various visions of democracies and non-democracies. In other words, they seek to create security through distinction – or an “us versus them” strategy – reasonably than through universalism.

The USA is pursuing this goal actively advocated for higher relations between Japan and South Korea — two Democratic U.S. allies deeply divided over reconcile after Japan's colonization of the Korean peninsula within the early twentieth century.

What a Trump victory could mean for Tokyo

But while the U.S. and Japan are in lockstep on many issues affecting the Indo-Pacific region, recent diplomatic spats in Washington — in addition to preparations for the visits — also raise areas of difference that concern Japan.

While Kishida has emphasized the U.S.-Japan economic relationship as a win-win scenario, the Biden administration has focused more on security measures.

In fact, Washington will not be entirely on the identical page as its Asian partners on trade and economic issues.

Biden did it, for instance speak out against the planned purchase of US Steel by the Japanese company Nippon Steel. Biden's reticence resonates a prevailing belief in economic nationalism in Washington, steeped in domestic politics.

But Tokyo's concerns transcend the present U.S. government's reluctance toward Japanese investment.

A possible second Trump presidency could, it’s feared in Tokyoupend the Biden administration's work to revitalize the alliance system within the Indo-Pacific.

It could also cause the US to fall further into economic nationalism. Under Trump, the USA saw Tariffs as a very important foreign policy instrument, while alliances are portrayed as transactional. For example, Trump demanded that Japan quadruple the annual payments that US troops needs to be stationed there.

Even under the Trump administration and to the chagrin of Japan within the USA left the Trans-Pacific Partnership multilateral trade agreementwhich continued without the US in the shape of the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership.

Japan on PR offensive

Japan is starting to hedge against a Biden defeat in November, laying the groundwork for what many in Tokyo hope will likely be a positive relationship with Trump should he grow to be president again.

Former Japanese Prime Minister Shinzo Abe, who was assassinated in 2022, formed such a relationship with Trump. And it was notable that it was Abe's former deputy prime minister, Aso, who did this met with Trump in New York to now re-establish a private connection – although Kishida's government described Aso's visit as that of a single lawmaker acting in his own capability.

Still, Kishida knows that it will not be only a Trump presidency that would threaten Japan's interests and goals for the Pacific region. American political elites generally are Tendency more towards isolationism. Meanwhile, the American public increasingly divided and unsure in regards to the advantages of trade and the role the United States should play globally.

During his US visit, Kishida desired to speak not only with the Biden administration, but additionally with Congress – each Democrats and Republicans – in addition to the US economy and the American public.

It was not only a leadership summit but additionally a PR tour.

During his speech to Congress – only the second by a Japanese Prime Minister – Kishida emphasized the necessity for the US to be a trusted ally and to say, “The world needs the United States” and “the people of Japan are at your side to ensure the survival of freedom.”

And during a subsequent visit to North Carolina, where he toured a Toyota electric vehicle battery factory and a HondaJet subsidiary, he reaffirmed the ties between the 2 countries – while emphasizing the positive economic contribution Japan is making to the United States.

Looking for a stable relationship

Japan is embracing its identity as an actively contributing member of the liberal international order. With the U.S. withdrawal from the Trans-Pacific Partnership and uncertainty over Washington's global role in the course of the Trump administration, Japan emerged as a number one proponent of preserving and maintaining that order.

But Japan also hopes that the USA will proceed to play a central role.

The high-profile meetings between Japan's political elite and each Biden and Trump show that Tokyo is trying to the US as a reliable partner – within the interests of each regional security and economic prosperity. But that is something that’s making US domestic politics increasingly difficult.