Japan’s Nikkei 225 index crashes 7%, yen rallies as US recession concerns shake global markets

Japan’s stock market plunged on Monday, extending last week’s sell-offs, as the Nikkei 225 stock index crashed over 7%. Nikkei fell more than 2,500 points during the day, before recovering slightly.

By the time of the Tokyo market’s midday break, the Nikkei index declined about 5.5%, or about 1,900 points, at 33,945.43. The broader Topix was down 6.6% at 2,370.18. Earlier, the index fell as much as 7.8% during the day.

The Nikkei has fallen 15% in three sessions and seemed set for its biggest three-day plunge since 2011.

The local currency yen, a safe-haven and carry-funding favourite, traded at 145.43, up 0.8% versus the dollar, after hitting a mid-January peak of 145.28 in early deals, Reuters reported. The yen has gained 10% against the dollar in just over three weeks, led by the Bank of Japan’s interest rate hike last week and an unwinding of yen-funded carry trades.

Asian markets extended losses on Monday following the selloff on Wall Street as the weak US jobs report stoked fears of recession and expectations for a big the US Federal Reserve rate cut in September. The Nasdaq Composite index confirmed it was in correction territory.

Taiwan’s Taiex sank 7.4%, Hong Kong’s Hang Seng index dropped 2.1%, while South Korea’s Kospi plunged 3.4%.

Early Monday, the US stock futures slumped, as the Dow Jones Industrial Average futures dropped by 1.5%, while the S&P 500 futures declined 1.4%.

Investors will now watch out for data on the US services sector from the US Institute for Supply Management due later Monday.

On Friday, US stock market ended sharply lower for a second straight session amid fears of an oncoming recession.

The Dow Jones Industrial Average declined 610.71 points, or 1.51%, to 39,737.26, while the S&P 500 slumped 100.12 points, or 1.84%, to 5,346.56. The Nasdaq Composite ended 417.98 points, or 2.43%, lower at 16,776.16.

(With inputs from Reuters)