Nikkei recovers as investors bargain hunt among the wreckage

Japan’s Nikkei share average jumped 2.7 per cent this morning following a sell-off due to uncertainty over the US Federal Reserve’s monetary policy and a subsequent bargain hunt by investors.

The Nikkei traded as low as 12,549.82 before recovering above the 13,000 mark. On the gains, the dollar strengthened against the yen – although the yen remains near a two-month high against both the dollar and the euro as investors play wait-and-see with Fed policy.

Last week, the IMF urged the Fed not to be too aggressive when tapering off of its quantitative easing policy, so as not to disrupt the financial markets. However, almost half of analysts responding to a Citi poll think tapering will begin by the end of the year.