The Japanese leading index Nikkei has lost more than 20 percent from its recent record high, with market participants calling it a bear market. Analysts are referring to a “market panic” concerning the US economy.
The sell-off on Asian stock markets continued at the beginning of the new trading week. Concerns about a potentially hard landing of the economy in the US scared investors on Monday as well. Additionally, technology stocks suffered from a report indicating that chip producer Nvidia is postponing the launch of new AI chips due to so-called design flaws. Nvidia had recently been the flagship of the general stock market rally as a major beneficiary of AI.
In particular, investors in Japan took further profits. The leading index Nikkei-225 plummeted by 12.40 percent to 31,458.42 points. This was the lowest level since November 2023. At one point, trading was halted due to the strong price fluctuations. Since the Nikkei has now lost more than 20 percent from its recent record high, market participants refer to it as a so-called bear market.
After months of price rallies in Japan, the Nikkei-225 had reached a peak of just over 42,400 points in mid-July. However, the national currency, the yen, experienced a strong increase in a short period, which heavily impacted the stock prices of Japan’s export-dependent companies. Against the US dollar, the yen fell to its lowest level since the beginning of the year on Monday.
“Market Panic”
The foreign exchange experts at Commerzbank spoke of a “market panic regarding the US economy.” The global stock indices are risk-averse and are selling stocks. With regard to the US, the question arises whether a recession can be avoided in light of recently weak economic data and an “unprecedented interest rate hike cycle.”
Chinese markets held up better than Japanese indices. The Hang Seng Index of the special administrative region of Hong Kong recently fell by 2.15 percent to 16,580.42 points. The Shanghai Composite dropped by 1.45 percent to 2863.14 points. However, both indices had already lost significantly in the past weeks. Meanwhile, the South Korean Kospi tumbled by 8.77 percent to 2441.57 points.
The Australian stock market also could not escape the weak trends. The S&P/ASX-200 slid by 3.70 percent to 7649.60 points. (APA/dpa-AFX)