The Nikkei went berserk, gaining almost 6%

SHIMOSUWA, JAPAN – APRIL 09: Participants prepare to ride a huge log slide down a hill during the Onbashira Festival on April 9, 2010 in Shimosuwa, Japan. The septennial festival has taken place for the past 1,200 years. The huge timbers are used as sacred pillars for the Suwa Grand Shrines of Kamisha and Shimosha, which are re-built in Suwa City. The lumbers’ journey down the mountainside often results in injury and fatalities as participants try to ride the timbers as they slide down the mountain. (Photo by Koichi Kamoshida/Getty Images)

After a horrendous reversal yesterday, the Nikkei has staged a spectacular comeback rally in Friday trade.

The Nikkei 225 closed at 16,965, up 5.8% for the day – a huge gain of 941 points, as risk assets rallied across Asia in the final session of a wild week.

It followed a shock session on Thursday that saw the Nikkei erase a 2% gain and finish down more than 2.4%,

The main trigger for the rally appears to have been comments from ECB President Mario Draghi overnight, in which he said there were “no limits” to what Europe was willing to do to reach its inflation target of 2%. That saw markets lift in Europe and on Wall Street.

The Nikkei had tipped into a bear market earlier this week, caught in the wave of selling that has characterised the month’s action on global markets.

The PBOC also fixed the yuan rate for offshore trading slightly stronger today, at 6.5572 compared to Thursday’s level of 6.5585. Stonger yuan fixes have generally served to increase investor risk lately, as investors have been wary of the rate at which China has been devaluing its currency.

Chinese markets were also positive in the afternoon, with the benchmark Shanghai Composite up 1.25% heading into its final hour of trade.

Via investing.com, here’s a chart showing the last two days of trade on the Nikkei, including yesterday’s horrendous reversal followed by the huge rally on Friday morning that continued through the trading session.

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