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BANGKOK (AP) — Japan’s benchmark Nikkei 225 index plunged 12.4% Monday morning as concerns about the U.S. economy sparked a sell-off.
The Nikkei share average closed down 4,451.28 points at 31,458.42. The broader Topix also fell 12.8% after rebounding in afternoon selling.
A report showing U.S. employers fell much more than expected last month jolted financial markets, undoing the euphoria that had pushed the Nikkei share average to a record high of more than 42,000 in recent weeks.
The Nikkei 225 fell 5.8% on Friday and is on track for its worst two-day drop in history. The Nikkei’s worst one-day drop was a 3,836-point, or 14.9% plunge on what became known as “Black Monday” in October 1987. Tokyo stocks have been falling since the Bank of Japan raised its benchmark interest rate on Wednesday. The index is now roughly where it started the year.
One of the factors leading to the central bank’s rate hikes is the prolonged weakness of the yen, which has caused inflation to exceed the central bank’s 2% inflation target. The dollar was trading at 142.39 yen on Monday morning, down from 146.45 yen on Friday afternoon and a far cry from more than 160 yen a few weeks ago.
The euro fell against the dollar from $1.0923 to $1.0896.
Share prices have reached sky-high levels this year amid a frenzy of buying for companies expected to thrive thanks to advances in artificial intelligence. The latest setback in the market hit computer processor makers such as Samsung Electronics and other technology stocks. South Korea’s Kospi fell 9.3% on Monday, with Samsung shares falling 11.6%.
Taiwan’s Taiex index plunged 8.4%, with shares of TSMC, the world’s largest chipmaker, falling 9.8%.
Stocks plunged on Friday after weaker-than-expected jobs data stoked concerns that the U.S. economy could collapse under the weight of higher interest rates aimed at curbing inflation. On Monday morning, S&P 500 futures fell 1.5% and the Dow Jones Industrial Average fell 0.7%.
“The volatility-on-vol spike was a spectacle, to put it mildly, and underscores how nervous markets have become,” Stephen Innes of SPI Asset Management said in a commentary. “The real question now is: can the typical market response of selling volatility or buying the dip overcome the deep-seated anxieties that have fueled this sudden, abrupt recession fear?”
The VIX index, which measures investor concerns about an impending fall in the S&P 500, fell 26% Monday morning. Bitcoin, which recently hit $70,000, fell 14% to $54,155.00.
Crude oil prices were little changed. The U.S. benchmark rose 9 cents to $73.61 a barrel, while Brent crude was unchanged at $76.81 a barrel.
Investors will be watching for U.S. services data due later on Monday from the Institute for Supply Management (ISM), which could help determine whether the worldwide sales boom is an exaggerated reaction, IG’s Yeap Jun Rong said in a note.
Although the U.S. economy continues to grow and a recession is far from certain, there are still global concerns about the weakness of the U.S. economy and market volatility.
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