Market Meltdown: Nikkei 225 Plunges Amid Global Sell-Off
On Monday, Japan’s benchmark Nikkei 225 index plummeted a staggering 12.4%, sparking worries in investors about the state of the U.S. economy and triggering a wave of selling that shook world markets. The Nikkei closed down a massive 4,451.28 points at 31,458.42 points, while the broader Topix index fell 12.8% as selling intensified in the afternoon.
European markets followed suit, with the Frankfurt stock market in Germany dropping by more than 3%, the Paris stock market falling by 2.6%, and the London stock market declining by 2.3%. Similar patterns were seen in Milan, where the market fell by 4%, and in Madrid, where the market dropped by 2.8%. As trading commenced on Monday, S&P 500 futures fell 2.5% and Dow Jones Industrial Average futures slid by 1.6%, setting a gloomy tone for Wall Street.
Global Economic Turmoil: Are Markets Overreacting?
The recent sell-off was triggered by a report on Friday revealing a sharper-than-expected slowdown in U.S. hiring, raising concerns about the strength of the U.S. economy. This news eroded the optimism that had led to the Nikkei’s record high of 42,000 points in the preceding weeks. While stock markets had been steadily climbing over the past year, driven by advancements in artificial intelligence and hopes for rate cuts by the Federal Reserve, professional investors had been warning of increasing volatility.
Financial markets were further rattled by fears that the U.S. economy could buckle under the pressure of high interest rates aimed at curbing inflation. The resulting spike in volatility has left many questioning whether the current market reaction is an overreaction, with uncertainties looming over the pace of rate cuts by the Federal Reserve and other critical factors.
Asian Markets in Disarray: Nikkei 225 Takes a Hit
The Nikkei 225 index saw a staggering 5.8% drop on Friday, marking its worst two-day decline in history. Shares in Tokyo have been plummeting since the Bank of Japan raised its benchmark interest rate, with the Nikkei down 3.8% from the same period last year. The strengthening yen, leading to inflation above the central bank’s target, has been a driving force behind the rate hike.
As markets tumbled in Asia, South Korea’s Kospi plunged 9.3%, Taiwan’s stock market fell by 8.4%, and Taiwan Semiconductor Manufacturing Co., the world’s largest chipmaker, saw a drop of 9.8%. Oil prices remained relatively stable, with U.S. crude rising slightly to $73.61 a barrel and Brent crude holding steady at $76.81 a barrel.
