Tokyo, Japan_ Japan’s Nikkei average fell nearly 9% in early trading on Monday, while the Japanese bank index plunged as much as 17% as concerns about a tariff-induced global recession continued to sweep markets.
The Nikkei fell as much as 8.8% to 30,792.74, its first drop since October 2023. The index fell 7.3% to 31,318.79 as of 0034 GMT, according to Reuters. All 225 components of the index fell. The broader Topix index fell 8% to 2,284.69. The Topix bank index fell as much as 17.3% and was last down 13.2%.
The bank index has borne the brunt of the sell-off in Japanese stocks, falling as much as 30% over the past three trading days.
Nikkei 225 index A-shares fell sharply to their lowest level in about 18 months on Monday as concerns about a global recession caused by escalating international trade tensions gripped the market. The benchmark index fell nearly 9% in early trading to a low of 30,792.74 points, a new low since October 2023. By midday, the index had recovered slightly but was still sharply lower at 31,318.79 points.
The sharp downturn follows a significant sell-off on Wall Street on Friday, triggered by President Donald Trump’s announcement of substantial tariff hikes on goods from major trading partners. These protectionist measures have ignited fears of retaliatory actions and a subsequent slowdown in global economic activity.
All 225 component stocks of the Nikkei were trading in negative territory, reflecting the widespread investor pessimism. The banking sector was particularly hard-hit, with a Topix index of banking shares plummeting as much as 17% during the morning session. This sector has now seen a staggering 30% decline over the past three trading sessions, indicating deep concerns about the potential impact of a recession on financial institutions.
The broader Topix index also experienced a steep decline, falling 8% to 2,284.69. Trading in Japanese futures had to be temporarily halted earlier in the day due to the market triggering circuit breakers designed to prevent excessive volatility.
Analysts point to the newly implemented 10% baseline tariffs by the United States, which took effect on Saturday, April 5th, as a key factor exacerbating market anxieties. Japan is reportedly facing a 24% tariff on its exports to the U.S. starting Wednesday, further fueling concerns about the impact on Japanese businesses and the overall economy.
Prime Minister Shigeru Ishiba acknowledged the severity of the situation and stated his intention to formulate a comprehensive deal proposal for negotiations with the U.S. regarding the tariffs. “When we negotiate with the U.S. we want to present a package. That will take some time, but we will make it a success,” Ishiba told reporters over the weekend, suggesting the proposal might involve sectors such as liquefied natural gas, automobiles, agriculture, and national security. He also indicated his aim to hold a call with President Trump this week.
The dramatic fall in the Nikkei mirrors similar declines in other Asian markets, including Australia’s S&P/ASX 200 and South Korea’s Kospi, which also experienced significant drops following the Wall Street meltdown. This synchronized downturn underscores the interconnectedness of global financial markets and the widespread concern over the potential ramifications of escalating trade disputes.
Market participants are now closely watching for any signals of policy responses from governments and central banks that might help to mitigate the growing fears of a global recession. The coming days are expected to be crucial in determining the longer-term impact of these trade tensions on the global economic outlook.