Japan’s Topix, Nikkei Stock Gauges Tumble 20% From July Peaks

Japan’s equity rout entered a third day as weak US jobs data added another blow to global investor confidence that is already fragile from the surge in the yen, higher interest rates and geopolitical tensions in the Middle East. 

The Topix and Nikkei 225 gauges slid more than 7% in morning trading in Tokyo, driving the their drops to more than 20% — a loss that signals a bear market. The three-day losses are the worst since the 2011 tsunami and Fukushima nuclear meltdown.

All 33 of its industry groups have fallen since the Bank of Japan raised interest rates on July 31, triggering a surge in the yen that has cast a pall over the earnings outlook for exporters. Even insurers and banks that were expected to benefit from higher rates are now some of the biggest losers since the BOJ’s hike as global equity markets slump. 

Signs of weakness in the US economy sparked a slump on Wall Street on Friday and a plunge in Treasury yields. Nonfarm payrolls rose by 114,000 — one of the weakest prints since the pandemic — and job growth was revised lower in the prior two months. The unemployment rate unexpectedly climbed for a fourth month to 4.3%, triggering a closely watched recession indicator.

Once the main drivers of the market’s ascent, foreign investors sold net ¥1.56 trillion Japanese cash equities and futures combined in the week that ended July 26, according to data from Japan Exchange Group Inc. The Topix tumbled more than 5% during that period, the most in four years. 

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