TOKYO — Japan’s Nikkei 225 share index plunged more than 12% on Monday as investors worried that the U.S. economy may be in worse shape than had been expected dumped a wide range of shares.
The Nikkei index shed 4,451.28 to 31,458.42. It dropped 5.8% on Friday and has now logged its worst two-day decline ever, dropping 18.2% in the last two trading sessions.
At its lowest the Nikkei plunged as much as 13.4%. Its biggest single-day rout was a drop of 3,836 points, or 14.9%, on the day dubbed “Black Monday” in October 1987. It suffered an 11.4% drop in October 2008 during the global financial crisis and fell 10.6% during the aftermath of massive earthquakes and nuclear meltdowns in northeastern Japan in March 2011.
Share prices have fallen in Tokyo since the Bank of Japan raised its benchmark interest rate on Wednesday. The benchmark is now about 3.8% below the level it was at a year ago.
The wave of selling hit all sorts of companies.
Toyota Motor Corp.’s shares dropped 11% and Honda Motor Co. lost 13.4%. Computer chip maker Tokyo Electron dived 15.8% and Mitsubishi UFJ Financial Group plunged 18.4%.
Investors around the world were left reeling as Japan’s Nikkei 225 stock index plummeted by a staggering 12.4% in a single day, marking one of the largest drops in the index’s history. The sharp decline was triggered by a widespread sell-off of shares by investors, who were spooked by a combination of factors including concerns about the global economy, geopolitical tensions, and rising inflation.
The sell-off in Japan’s stock market was part of a broader trend that saw markets across Asia and Europe also experiencing significant losses. The Nikkei 225, which is considered a key indicator of Japan’s economic health, fell to its lowest level in over a year, wiping out billions of dollars in market value.
One of the main reasons behind the sell-off was the growing uncertainty surrounding the global economy. Investors have been increasingly worried about the impact of rising inflation and interest rates on corporate profits, as well as the ongoing trade tensions between the United States and China. These concerns have led many investors to reassess their risk appetite and reduce their exposure to equities.
In addition to economic factors, geopolitical tensions have also played a role in the market sell-off. The escalating conflict between Russia and Ukraine, as well as the ongoing political turmoil in the Middle East, have added to investor anxiety and contributed to the volatility in global markets.
The sell-off in Japan’s stock market has raised concerns about the country’s economic outlook, as well as its ability to weather external shocks. Japan has been struggling with sluggish economic growth and deflation for years, and the recent market turmoil has only added to these challenges.
Despite the sharp drop in the Nikkei 225, some analysts remain optimistic about Japan’s long-term prospects. They point to the country’s strong fundamentals, including a highly educated workforce, advanced technology sector, and stable political environment, as reasons for optimism.
However, it is clear that investors will need to closely monitor developments in the global economy and geopolitical landscape in the coming months. The sell-off in Japan’s stock market serves as a stark reminder of the interconnected nature of financial markets and the need for investors to stay informed and vigilant in order to navigate volatile market conditions.
