Global Market Turmoil: Nasdaq Futures Drop 3% with Japan Leading the Loss

cryptonews.com:

The Tokyo stock market witnessed a sharp plunge on Monday, with the Topix and Nikkei 225 Stock Average sliding by 12%, casting a shadow of uncertainty over global financial markets.

The sharp downturn was fueled by a combination of factors, including a strengthening yen, more stringent monetary policies, and a bleak economic outlook in the United States.

Notably, the drop has pushed both the Topix and Nikkei 225 Stock Average indices into bear market territory.

The Topix index recorded its most severe three-day decline in history, tracing back to data from as early as 1959.

Tech firms and financial institutions bore the brunt of the selloff on the Topix, with the yen surging over 3% against the dollar, unwinding carry trades and triggering a cascade of selling.

The banking sector felt the impact as well, with government bond yields plummeting by as much as 20 basis points, leading to multiple triggers of circuit breakers for index futures.

BREAKING: Japan's stock-market suspends futures trade as market down 8%

— The Spectator Index (@spectatorindex) August 5, 2024

Kyle Rodda, a senior market analyst at Capital.Com, highlighted the widespread deleveraging underway, as investors rushed to liquidate assets to offset losses.

“The rapidity of the move has caught me off guard; there’s a lot of panic selling now, which is what causes these non-linear reactions in asset prices to pretty straightforward fundamental dynamics,” he said.

Following the Bank of Japan’s recent interest rate hike, all 33 industry groups within the Topix index have witnessed declines, especially impacting exporters due to the yen’s ascent.

The unwinding of yen-funded carry trades, once popular in emerging markets, has added to the turmoil as investors reassess