Asian stock markets, led by Japan, South Korea and Taiwan, plunged on Monday, following last week’s global declines and amid fears of a recession in the United States.
The Nikkei plunged 12.40% at the close of trading, its second-biggest fall in history, dragged down not only by pessimism surrounding the US but also by the strengthening of the yen, fuelled by the Bank of Japan’s (BoJ) latest rate hike.
Last week the BoJ raised interest rates for the second time this year, and the yen accelerated its rally against the dollar and the euro, after a weak Japanese currency had been favourable for the Nikkei during the first half, but now the momentum is reversing.
Other Asian stock markets fall: Seoul, Taipei, Hong Kong, Shanghai
The Seoul Stock Exchange, for its part, fell by 8.77% at the close of trading on Monday.
The South Korean market, like the rest of the Asian markets, has been affected today by the falls with which Wall Street closed last week following a worrying report on the situation of the US labour market in July, which suggests a possible recession.
The US unemployment rate rose two-tenths of a percentage point in July to 4.3 percent, the highest figure since October 2021.
Global investors fear that the US Federal Reserve’s expected rate cut in September may come too late to alleviate the poor labor market situation.
In Taiwan, the Taipei Stock Exchange’s main benchmark index, the Taiex, closed today with a drop of 8.35% after losing 1,807.21 points, marking the largest drop in a single session in its history.
The island’s technology companies, dragged down by their American counterparts, were the worst hit: shares of Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest chip manufacturer, lost 9.75% at the close of trading, as did Hon Hai (Foxconn), the assembler of many Apple products, whose shares fell 9.92%.
To a lesser extent, the Hong Kong, Shanghai and Shenzhen stock exchanges also remained in the red at midday, with falls generally less than 3% but which have become more acute throughout the day.
The muted impact on these markets is partly due to the predominantly domestic nature of mainland China’s stock markets, and to the rise of the yuan, the national currency, which would allow the central bank of the world’s second largest economy more room for monetary easing.
The yuan thus appreciated today against the dollar to its highest level in the last seven months, following the trend of the Japanese yen.
The falls have also spread to the stock markets of Southeast Asia, where the Singapore stock exchange led the day in declines, standing at around -4%; followed by the Philippines (almost -3%); and Malaysia (-2.75%), around three hours before closing.
In Australia, the ASX 200 index fell 3.7% at the close, placing the index at its lowest point in the last two months.
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