Tokio.-The Nikkei 225 index on the Tokyo Stock Exchange fell 12.4 percent, marking the biggest drop in points in its history and the largest since the market crash of 1987.
The plunge follows weak U.S. jobs data on Friday, raising concerns about the world’s largest economy.
Meanwhile, stock markets in Europe and Asia plunged on Monday, hurt by fears that the US economy is slowing. In London, the FTSE 100 index opened down 2.3%, while the Euronext 100 fell 3.5%.
The Japanese yen has strengthened against the U.S. dollar since the Bank of Japan raised interest rates last week, making Tokyo stocks more expensive for foreign investors. Stock markets in Taiwan, South Korea, India, Australia, Hong Kong and Shanghai also plunged.
In Europe, the benchmark Stoxx Europe 600 index lost 2.2%. Futures markets indicated the bearish trend could extend to the United States, with contracts tracking the Nasdaq 100 falling 3.8% and the S&P 500 expected to open 2.3% lower.
Traders in Tokyo told international agencies that the selling was part of a broader correction and risk-reduction move by global funds. In addition, stocks in Tokyo were also hit by a yen that has strengthened by about 12% since mid-July. On Monday, the yen rose 3% to ¥142.27 against the dollar.
The global declines come amid fears that the US Federal Reserve has been too slow to respond to signs of weakness in the US economy, and could be forced to cut interest rates quickly in a series of rapid reductions. Markets now expect cuts of 1.25 percentage points – five quarter-point reductions – in the Fed’s final three meetings of the year.
Investor concerns about the health of the world’s largest economy and rising tensions between Israel and Iran have added further pressure to a market already burdened by an exodus of investors from high-yielding technology stocks.
Futures on the Vix index, which measures volatility and is known as Wall Street’s “fear index,” rose above 40 points on Monday, the highest level since the early stages of the Covid-19 pandemic.
Trading in Topix and Nikkei futures was halted during the afternoon session in Tokyo as frenzied selling continued into the close, reaching “circuit breaker” levels that automatically halt trading. In South Korea, similar mechanisms were triggered for the first time in four years. Traders in Tokyo at three different brokerages said they knew of several large hedge fund clients who had been ordered to close out all their positions as losses mounted.
The slump in Japan was mirrored in other Asian markets. South Korea’s Kospi index fell 8.8%, while Australia’s S&P/ASX dropped 2.5%. India’s Sensex lost 2.6%.
The global turmoil also extended to the cryptocurrency market, with the price of bitcoin falling nearly 16% to $52,740, while the price of ether, another cryptocurrency, fell nearly 17% to $2,200.
The Fed kept rates unchanged at its meeting last week, but the market reaction to the jobs data suggests investors believe the central bank may have made a mistake in not cutting rates.
The technology-focused Nasdaq Composite ended last week down 3.4% and is down more than 10% from July’s all-time high. Treasuries rallied, with the U.S. 10-year bond yield hitting its lowest level since December at 3.82%.
On Saturday, Warren Buffett’s Berkshire Hathaway revealed it had halved its stake in Apple in the second quarter, increasing its cash position to a record $277 billion and buying Treasury bonds.
Japan’s stock market suffered its worst day in 37 years on Monday, falling 12% amid a global rout triggered by the prospect of a U.S. recession. The Topix index erased all of its gains for the year, in the steepest sell-off since Black Monday in October 1987.Infobae.
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2024-08-12 07:41:39
