Japanese stock market plummets, AEX also down; fear of recession in US

The stock market in Japan has started the week dramatically. The Nikkei index closed at a loss of 12 percent. It would be the biggest daily loss ever. In response, the AEX in Amsterdam is now more than 3 percent in the red at 849 points. The main index already lost more than 3 percent on Friday. Especially the tech companies ASML and ASMI are going down further.

The MidKap in Amsterdam lost 2.6 percent this morning to 832.73 points. The stock exchanges in Frankfurt, London and Paris fell up to 3 percent.

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The main index in Tokyo fell to its lowest level in seven months today. Japanese export companies such as Toyota were particularly hard hit. The Nikkei lost more than 20 percent of its value in the last three trading days compared to the record level of last month.

The signs are also turning red on other stock exchanges. In Seoul, trading was even temporarily halted and the Kospi fell 9 percent in the meantime. The stock exchange in Sydney fell 3.6 percent and the Hang Seng index in Hong Kong lost 2.6 percent.

ASML’s major loss

After the heavy price losses last Friday, the tech companies ASML, Besi and ASMI fell sharply again this morning on the Amsterdam stock exchange. The red figures this morning rose to 12 percent. The banks are also having to pay the price for fear of a recession. ING and ABN Amro lost 7 and 4 percent. After all, in the event of a recession, there is a chance that customers will no longer be able to repay their loans.

Since the end of last week, investors have been fearing a recession in the US. According to them, this is because the US Federal Reserve waited too long to lower interest rates and is now lagging behind.

On Friday, it emerged that employment growth in the United States slowed significantly in July, adding to concerns about a slowdown in the world’s largest economy and the U.S. labor market.

Japan correspondent Anoma van der Veere:

“I see a push notification on my phone every now and then. They are not used to these numbers in Japan. With this nosedive – 4400 points off – there is a lot of fear of a recession. Everyone thinks back to that time in the late 80s, when a years-long crisis also started with a crash on the stock market.

The Japanese government, which usually keeps aloof, has also responded. The chief of staff said that the price drops are seen as an urgent problem and the government says it will take measures if necessary. In this way they are trying to calm people down a bit.”

The Japanese stock market plummeted on Monday, with the Nikkei in Tokyo closing down more than 12 percent, its biggest price loss since the 1987 stock market crash.

Japan’s main index fell to its lowest level in seven months. With Monday’s loss, the Nikkei has lost more than 20 percent in the past three trading days from last month’s record. The falling prices are mainly the result of a disappointing jobs report that was released in the United States last week. Investors see it as a possible indication of a recession.

They fear that the US banking regulator Federal Reserve waited too long to cut interest rates and is now lagging behind. The Fed said last week that it would not cut interest rates until September to support the economy.

Stock market trading halted several times

Trading in Japan has been interrupted several times to calm the mood. Due to a rise in the Japanese yen, the prices of companies that do a lot of foreign trade fell sharply. The currency is seen as a safe haven in troubled times, but makes Japanese goods such as cars more expensive for foreign countries.

Other stock markets in the region also plunged sharply into the red. In Seoul, where trading was also temporarily halted, the index fell by 10.5 percent. The stock exchange in Taiwan lost more than 8 percent and the main index in Sydney fell by 3.8 percent. The stock exchanges in Hong Kong and Shanghai lost 2.6 percent and 1.3 percent respectively.