Stock markets across Asia took a nosedive on Monday, with major indexes plummeting following a week of significant losses worldwide. In Japan, both the Nikkei 225 and Topix indexes were down nearly 13% in afternoon trade, sparking concerns about the state of the global economy.
The sharp decline in Asian markets was attributed to weak jobs data in the US, which raised fears about the strength of the world’s largest economy. Additionally, the yen’s recent surge against the US dollar has made Japanese stocks more expensive for foreign investors, further dampening market sentiment.
“The selloff was instigated by the sharp appreciation of the yen as global investors turned cautious on Japanese corporate earnings, especially that of exporters such as automakers,” said Kei Okamura, a portfolio manager at Neuberger Berman.
The Bank of Japan’s decision to raise interest rates last week, in contrast to other central banks, has also contributed to the market turmoil. Inflation in Japan exceeded expectations in June, while the economy contracted in the first quarter due to a weaker yen and sluggish household spending.
Elsewhere in the Asia-Pacific region, Taiwan’s main share index and South Korea’s Kospi both fell over 8%, while India’s Nifty 50 and Australia’s S&P/ASX 200 also experienced significant losses. Cryptocurrencies, including Bitcoin, saw a decline, with Bitcoin dropping to its lowest level since February.
The downward trend in Asian markets follows a sharp decline in New York stocks on Friday, triggered by disappointing US jobs data. The figures for July showed a significant slowdown in job growth, raising concerns about the future of the US economy and prompting speculation about potential interest rate cuts by the Federal Reserve.
Overall, the recent market volatility has been fueled by worries about high borrowing costs and signs that the long-running rally in share prices may be losing steam. Warren Buffett’s Berkshire Hathaway even disclosed selling half its stake in Apple, adding to the uncertainty surrounding tech stocks.
As investors brace for further turbulence in the coming days, the global economic outlook remains uncertain, with conflicting signals pointing to both positive and negative outcomes.
