By John Meyer, consultant in financial affairs – Eurasia Business News, August 5, 2024. Article n°1132.

The Nikkei index of the Tokyo Stock Exchange (TSE) plunged more than 12% on Monday as investors worried that the U.S. economy may be in worse shape than had been expected dumped a wide range of shares. The Nikkei index shed 4,451.28 to 31,458.42.

This is the largest drop in a day since Black Monday on Wall Street in 1987, according to The Wall Street Journal (WSJ).

The maximum drop during trading exceeded 13%. By the close of trading, the Nikkei lost 4451.28 points and dropped to 31,458.42 points. A rapid drop in the index has been observed since August 2. Then the Nikkei closed trading at 35,909 points, down 2216 points (-5.8% compared to August 1).

Other Asian stock markets also saw a fall. South Korea’s Kospi index fell by 8%. The main index of the Taiwan Stock Exchange TAIEX fell by 8.35%. The MSCI Asia Pacific Asian stock index fell by 4.9%, approaching the worst ever record recorded at the beginning of the pandemic in 2020.

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The collapse of stock markets in Asia comes amid fears that the United States may enter a recession. The indicators in the report on the situation in the labor market were below analysts’ expectations. The US unemployment rate rose to 4.3% in July.

Share prices have fallen in Tokyo since the Bank of Japan raised its benchmark interest rate on Wednesday. The benchmark is now about 3.8% below the level it was at a year ago.

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Goldman Sachs analysts estimate the probability of a recession in the United States in the next 12 months at 25%. JPMorgan predicts a 50% economic slowdown. Analysts expect the Fed in the United States to cut the rate by 50 basis points in September, which is now at the level of 5.25-5.5% per annum.

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© Copyright 2024 – Eurasia Business News. Article No. 1132.