A look at the day ahead in European and global markets from Stella Qiu.
Is the Bank of Japan taking the mantle of market saviour from the Fed? Nikkei investors sure hope so.
After falling 3% early in the day, the Nikkei rebounded 2.8% and was almost back where it started before Monday's 13% crash.
BOJ Deputy Governor Shinichi Uchida saved the day, and perhaps the fate of the yen carry trade, by saying the central bank wouldn't hike interest rates when markets are so volatile.
The dollar surged 2% on the yen, Japanese yields slipped, and markets pared the probability of a BOJ October rate rise to just a one-in-four chance.
That was a marked turn from last week when the BOJ hiked rates by 15 basis points and flagged more tightening ahead, which led to a surge in the yen and the unravelling of the yen carry trade - where investors borrow the currency at low rates to buy higher-yielding assets.
Global investors reacted positively to the BOJ's new guidance. European stock markets are set to rally sharply when they open, with EUROSTOXX 50 futures STXEc1 firming 1.3% and FTSE futures adding 1.2%.
Nasdaq futures turned 1.1% higher, having edged lower earlier in the day on a 12% dive in AI darling Super Micro Computer after it missed earnings estimates.
Pretty much everything rose. Even trade data from China contained a pleasant surprise on the strength of domestic demand as imports beat expectations. Export growth missed forecasts, but were still up solidly.
Key developments that could influence markets on Thursday:
-- Earnings from Glencore (LON:GLEN), Coca Cola, Puma, Nova Nordisk
-- Trade data from Germany, UK house prices for July
-- ECB board member Elizabeth McCaul appears in a panel discussion, ECB's Olli Rehn gives opening speech at Bank of Finland seminar
(By Stella Qiu; Editing by Edmund Klamann)