Global stock markets experienced a significant downturn with Japanese shares suffering their biggest one-day drop since the “Black Monday” crash in October 1987, as fears of a US recession triggered widespread selling, Reuters reports.
Japan’s Nikkei and Topix indexes plummeted by 12.40% and 12.48%, respectively, following the Bank of Japan’s first interest rate hike in two decades. Nasdaq futures fell over 4%, and the S&P 500 futures dropped around 3%, while European shares hit near six-month lows. The CBOE Volatility Index surged to its highest level since March 2020, indicating heightened market anxiety.
The US dollar weakened against major currencies, and gold lost some of its appeal as a safe haven. Oil prices also dropped amid concerns over global energy demand. The yen and Swiss franc strengthened as investors sought safer assets, while US Treasury yields fell to their lowest levels since mid-2023.
The recent weak US payrolls report increased expectations for the Federal Reserve to cut rates aggressively to support growth, with futures indicating significant cuts by year-end. Investors are watching upcoming economic data and earnings reports, including from Caterpillar and Walt Disney, for further insights into the economic outlook and market direction.
