Japan’s markets experienced significant losses, with the Nikkei 225 and Topix plummeting by up to 7% in volatile trading. Major trading houses like Mitsubishi, Mitsui and Co, Sumitomo, and Marubeni all saw declines of around 10%.
This downward trend places both the Nikkei and Topix close to bear market territory, having dropped nearly 20% from their peak on July 11, this year.
The Tokyo Price Index, TOPIX, which covers all domestic companies listed in the First Section of the Tokyo Stock Exchange, triggered a circuit breaker early in the morning following the Bank of Japan’s decision to raise its benchmark interest rate to about 0.25% last week, compared to the previous range of 0% to 0.1%. Under Ueda’s leadership, the BOJ has increased rates by a total of 35 basis points in just four months.
Analysts anticipate a more assertive approach from the central bank towards its policy rates in 2024, potentially leading to further rate hikes.
On Monday, the yen surged to its highest level against the dollar since January and was last quoted at 144.97.
This decline in Japanese markets influenced American stock futures negatively at the start of the week. Dow Jones Industrial Average futures dropped by 383 points, or close to 1%, while S&P 500 futures and Nasdaq-100 futures decreased by 1.6% and 2.5%, respectively.
