Japan’s Nikkei 225 stock index fell 12.4% on Monday, closing down 4,451.28 points at 31,458.42. The broader TOPIX index declined 12.8% as selling intensified in the afternoon.
Global markets experienced a sell-off, with futures for the S&P 500 down 2.4% and the Dow Jones Industrial Average down 2.6%. This followed a report showing a significant slowdown in US hiring, which has unsettled investors.
On Friday, the Nikkei dropped 5.8%, marking its worst two-day decline. The index is now 3.8% lower than a year ago. The sell-off followed the Bank of Japan’s decision to raise its benchmark interest rate on Wednesday, driven by a weakening yen and inflation exceeding the central bank’s 2% target.
The US dollar was trading at 142.59 yen early Monday, down from 146.45 late Friday. The euro also saw a slight decline, trading at $1.0914.
Stock markets across Asia were affected, with South Korea’s Kospi falling more than 9% and Taiwan’s Taiex losing 8.4%. The VIX, a measure of investor anxiety about potential declines in the S&P 500, increased by 26% early Monday. Bitcoin fell 14% to $54,155.00, while oil prices also declined, with US crude oil at $72.78 per barrel and Brent crude at $76.14.
Market data
Investors are awaiting data on the US services sector from the Institute for Supply Management, which could influence the direction of global markets. Despite concerns, the US economy continues to grow, though the potential for a recession remains.
Other Asian markets also declined, with Hong Kong’s Hang Seng index down 2.2% and Shanghai’s Composite index losing 1.5%. The US stock market saw its first back-to-back loss of at least 1% since April, with the S&P 500 down 1.8%, the Dow Jones Industrial Average down 1.5%, and the Nasdaq composite falling 2.4%.
The decline in US markets came shortly after positive movements following Federal Reserve Chair Jerome Powell’s indications that inflation might have slowed enough for rate cuts to begin in September. However, there are growing concerns that the Federal Reserve may have kept its interest rate too high for too long, increasing the risk of a recession.
