Japan’s Nikkei 225 index plunges nearly 7% as global sell-offs resume
BANGKOK– Japan’s benchmark Nikkei 225 stock index fell 6.7% early Monday morning but recovered somewhat, extending a selloff from last week.
The Nikkei had fallen more than 2,400 points to 33,488.08 about half an hour after the opening. About an hour after the start of trading, the index had fallen 5.3%, or about 1,900 points, to 34,010.69.
Stock prices fell on Friday on concerns that the U.S. economy could buckle under the pressure of high interest rates meant to curb inflation.
A report showed that U.S. employer employment slowed much more than expected last month, rattling financial markets and destroying the euphoria that had propelled the Nikkei to record highs of over 42,000 in recent weeks.
The S&P500 fell for the first time on Friday, down 1.8% consecutive losses of at least 1% since April. The Dow Jones Industrial Average fell 610 points, or 1.5%, and the Nasdaq Composite fell 2.4% as stocks globally and back on Wall Street fell.
The defeat had just begun a few days later U.S. stock indexes rose to their best day in months after Federal Reserve Chairman Jerome Powell gave the clearest signal yet that inflation had eased enough to cut interest rates in September.
Now, concerns are mounting that the Fed may have kept its key interest rate at a two-decade high for too long, raising the risk of a recession in the world’s largest economy. A rate cut would make it easier for American households and businesses to borrow money and boost the economy, but the full effects could take months to a year to sink in.
Concerns about the weakness of the US economy and unstable markets are spreading around the world, even though the US economy is still growing and a recession is far from certain.
The Nikkei 225 fell 5.8% on Friday, as the index has struggled since the Bank of Japan reference rate on Wednesday. The increase pushed up the Japanese yen against the U.S. dollar, which could hurt exporters’ profits and dampen a tourism boom.
On Monday morning, the dollar was trading at 145.50 yen, well down from the level of over 160 yen a few weeks ago.
Chinese stocks fell on Friday as investors were disappointed with the the latest efforts of the government to stimulate growth with a variety of piecemeal measures, rather than the hoped-for broader stimulus, while stock indices in much of Europe fell by more than 1%.