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The stock markets opened in a state of high alert this Monday. The Tokyo Stock Exchange recorded the worst drop in points in its history, while European markets are in free-fall.
A “bear market” in Japan, CAC 40 dropping more than 2% in France… The global stock market’s downfall continued on Monday. The Tokyo Stock Exchange fell again after one of its worst declines in history on Friday, closing down 12.4%. The Nikkei experienced its steepest point drop since 1987 and the second largest in its history, largely due to a shift in Japan’s monetary policy. Overall, all major markets are facing a “black Monday.”
More specifically, the Nikkei 225 index, which had already fallen by 5.8% on Friday, collapsed by 12.4% to 31,458.42 points, a drop of about 4,400 points, surpassing its previous record from the October 1987 crash. The broader Topix index also slid 12.23% to 2,227.15 points.
Likewise, the Seoul Stock Exchange lost more than 8%, with the KOSPI plummeting 8.09% to 2,459.81 points. In Taiwan, the Taiex index fell 8.43% to 19,813.83 points, and TSMC experienced a 9.52% loss.
As for the Chinese markets, in Hong Kong, the Hang Seng Index fell by 0.04% to 16,939.50. The Shanghai Composite Index increased by 0.30% to 2,914 points, and the Shenzhen Index climbed 0.59% to 1,591.09 points.
European stock markets also in decline
Following a tough day on Wall Street on Friday and a plunge in Asian markets, the CAC 40 index in Paris fell by more than 2% at the start of trading. In early transactions, the Paris stock exchange declined by 2.42%, London by 1.95%, Frankfurt by 2.49% and Amsterdam by 3.05%. It’s worth mentioning that on Friday, Paris had already declined by 1.61%, closing at 7,251.80 points, its lowest since late November. On Wall Street, stock indices also ended sharply lower, with the Dow Jones down 1.51%, the S&P 500 down 1.84% and the Nasdaq down 2.43%.
In fact, on Wall Street, Intel plunged 26.06 points on Friday, with its stock dropping to $21.48, heavily impacting the Nasdaq. Similarly, Amazon fell by 8.78% to $167.90, and Snap’s shares lost 26.93%.
The reasons behind this plunge?
This sharp decline was likely triggered by a report on the US job market. Indeed, employment growth slowed more than expected last month, with the unemployment rate rising to 4.3%, up 2% from June and the highest since October 2021. Meanwhile, investors are watching for a possible rate cut by the Federal Reserve System. Last Wednesday, as expected, the US central bank did not change its rates at its meeting, but hinted at a potential cut as early as September.
Other factors also contributed to this situation, such as the release of a US report showing a contraction in manufacturing activity in July, as well as declines in technology stocks and disappointing half-year results. Also, fears of escalating conflict and a large-scale war in the Middle East are adding to market volatility.