Japan’s Nikkei Index, Reflecting Global Rout Over American Recession Fears, Sees Worst Day in Decades

BANGKOK — Japan’s benchmark stock index plunged 12.4 percent on Monday, compounding a global market rout set off by investor concerns that the American economy could be headed for recession.A report Friday showing hiring by American employers slowed last month by much more than expected has convulsed financial markets, vanquishing the euphoria that had taken the Nikkei 225 to all-times highs of over 42,000 in recent weeks.The shakeup began just a couple of days after American stock indexes had jumped to their best day in months after the Federal Reserve chairman, Jerome Powell, set the stage for possible rate cuts to begin in September.After Friday’s jobs report, though, worries are rising the Fed may have kept its main interest rate at a two-decade high for too long, raising risks of a recession in the world’s largest economy. A rate cut would make it less expensive for American households and companies to borrow money, but it could take time for the effects to boost the economy.Until Friday, there had been relatively few huge market swings in the past year.A bonanza around artificial intelligence technology helped drive Big Tech stocks higher, while other areas of the market held up amid rising hopes for coming cuts to interest rates by the Federal Reserve. Professional investors have been warning that shakier times may be ahead, though, given uncertainty about how quickly the Fed will cut interest rates and other big questions.On Monday, the Nikkei closed down 4,451.28 points at 31,458.42. It had dropped 5.8 percent on Friday, making this its worst two-day decline ever. Its worst single-day rout was a plunge of 3,836 points, or 14.9 percent, on Oct. 19, 1987, a global markets crash that was dubbed “Black Monday” but proved to be only a temporary setback despite fears it might have augured a worldwide downturn.European markets also opened lower Monday, with Germany’s DAX down 2.3 percent at 17,267.00. The CAC 40 in Paris lost 1.9 percent to 7,114.33 and the FTSE 100 in London was 2.1 percent lower at 8,004.19.Darkening the outlook for trading on Wall Street, early Monday futures trading for the S&P 500 was 2.5 percent lower and that for the Dow Jones Industrial Average was down 1.6 percent.Share prices have fallen in Tokyo since the Bank of Japan raised its benchmark interest rate on Wednesday. The Nikkei is now down 3.8 percent from a year ago.The Japanese yen also has fallen sharply, trading at 142.37 yen, down from 146.45 late Friday and sharply below its level of over 160 yen a few weeks ago.The euro rose to $1.0952 from $1.0923.The VIX, an index that measures how worried investors are about upcoming drops for the S&P 500, was up about 26 percent as of early Monday. Bitcoin, which recently had surged to nearly $70,000, was down 16 percent at $53,160.00.Oil prices slipped, with U.S. benchmark crude oil giving up 74 cents to $72.78 per barrel. Brent crude, the international standard, lost 67 cents to $76.14 per barrel.Investors will be watching for data on the American services sector from the Institute for Supply Management due later Monday that may help determine if the sell-offs around the world are an overreaction, IG’s Yeap Jun Rong said in a report.Even though worries over weakness in the American economy and volatile markets have rippled around the world, the United States economy is still growing, and a recession is far from a certainty.The mood was decidedly dark, though.Hong Kong’s Hang Seng index lost 2.2 percent to 16,579.97 and the S&P/ASX 200 in Australia declined 3.7 percent to 7,649.60.The Shanghai Composite index, which is somewhat insulated by capital controls from other world markets, edged higher but then gave way, losing 1.5 percent to 2,862.56.The S&P 500’s 1.8 percent decline Friday was its first back-to-back loss of at least 1 percent since April. The Dow Jones Industrial Average dropped 1.5 percent, and the Nasdaq composite fell 2.4 percent, taking it to 10 percent below its record set last month. That level of drop is what traders call a “correction.”Associated Press

Japan’s Nikkei Index, Reflecting Global Rout Over American Recession Fears, Sees Worst Day in Decades

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