Concerns about a U.S. recession continue into the new week, with significant declines hitting Asian stock markets, including South Korea, Japan, and Taiwan. These markets, integral parts of the U.S. value chain, face severe losses.
According to Yahoo Finance, as of 1:30 PM today, Japan’s Nikkei 225 index had dropped 8.16% from the previous day, reaching 32,979.74. This decline mirrors the 8% drop seen in the South Korean market.
The Nikkei index briefly rose by 1.49% on July 31st following the Bank of Japan’s (BOJ) increase in short-term interest rates. However, it fell sharply by 2.49% on August 1st and 5.81% on August 2nd. Over the past three trading days, the Nikkei index has shown its worst performance since the 2011 earthquake, falling approximately 20% from its peak on August 11th.
Another Japanese index, the TOPIX, also experienced a circuit breaker, signaling a decline of 8.17%, with the index at 2,330.36.
Simultaneously, Taiwan’s Weighted Index saw an 8.08% drop from the previous session, settling at 19,890.56.
These declines in Asian stocks reflect the negative sentiment from the U.S. markets last week.
The tech-heavy Nasdaq index dropped 2.30% on August 1st and 2.43% on August 2nd, entering a correction phase with a decline of over 10% from last month’s peak.
Despite the Federal Reserve’s decision to keep the federal funds rate steady at 5.25% to 5.50% following the Federal Open Market Committee (FOMC) meeting on July 31st—and the possibility of a rate cut in September—the disappointing employment data has heightened recession fears. The U.S. July employment report, released on August 2nd, showed an unemployment rate of 4.3%, the highest in nearly three years.
