Local markets on watch after Nikkei, ASX falls
New Zealand investors will be nervously watching the opening of the stock market this morning, after the Nikkei had its biggest slump in daily value since 1987, and ASX shares took a tumble yesterday.
Following recessionary fears out of the US, New Zealand’s local bourse closed down 1.51% yesterday as markets worry that a hard economic landing in the US could take global markets with it.
Yesterday in Tokyo the Japanese stock exchange, the Nikkei 225 Index, had its single biggest day of losses since the global stock market crash of 1987, often known as “Black Monday”.
The Nikkei had fallen by 12.4% by the close, in a day’s trading during which it fell as low as 13.4%.
The biggest single drop in 198y was 14.7%. The S&P/ASX 200 closed down 3.7% yesterday.
The fall followed a 5.8% drop on Friday, wiping out all gains for the year and making it the worst two-day decline ever.
Markets in New Zealand and Australia have been spooked by weaker than expected labour data that came out of the US on Friday, which prompted fears that the world’s biggest economy could be headed for a recession
On Friday US unemployment rate jumped to a three-year high of 4.3%, up from 4.1%.
AP reported that Tokyo share prices have fallen since the Bank of Japan raised its benchmark interest rate on Wednesday. The Nikkei is now down 3.8% from a year ago.
One factor driving the BOJ to raise rates was prolonged weakness in the Japanese yen, which has pushed inflation to above the central bank's 2% inflation target.
Shares surged to stratospheric heights earlier this year on frenzied buying of shares in companies expected to thrive thanks to advances in artificial intelligence.
The latest setback has hit markets heavily weighted toward computer chipmakers like Samsung Electronics and other technology shares: yesterday, South Korea’s Kospi plummeted 9.3% as Samsung's shares sank 11.6%.
Taiwan’s Taiex also crumbled, losing 8.4% as Taiwan Semiconductor Manufacturing Co, the world’s biggest chip maker, dropped 9.8%.
“To put it mildly, the spike in volatility-of-volatility is a spectacle that underlines just how jittery markets have become,” Stephen Innes of SPI Asset Management was reported by AP as saying in a commentary.
“The real question now looms: Can the typical market reflex to sell volatility or buy the market dip prevail over the deep-seated anxiety brought on by this sudden and sharp recession scare?”