MercoPress. South Atlantic News Agency

“Black Monday” hits stock exchange markets worldwide

A dwindling US economy amid geopolitical tensions worldwide added to the negative trend, it was reported

Plunging Asian stock markets set off a domino effect “Black Monday” on Aug. 5. For Japan's Nikkei, a 12.4% drop was its second-deepest ever. As a result, fears of a recession in the United States have mounted following last week's global falls.

The Seoul Stock Exchange, meanwhile, fell 8.77% at the close of trading. The Hong Kong, Shanghai, and Shenzhen stock exchanges also closed in the red, with losses of 1.46%, 1.54% and 1.85% respectively.

Kuala Lumpur plunged by more than 4.5%, while Manila and Bangkok only fell by around 2.5%. In Australia, the ASX 200 index fell by 3.7% at the close, bringing the index to its lowest point in the last two months. Stocks in Taiwan also fell more than 8% on Monday. Indian stock market benchmarks – the Sensex and the Nifty 50 – declined over 3%. The MSCI World index of Asia-Pacific shares outside Japan was down by 4.2%.

A worrying report last week on the situation of the US labor market in July triggered Monday's outcome as unemployment went up to 4.3%, the highest figure since October 2021. Wall Street had already closed sharply down on Friday. Fears over a military escalation in the Middle East are placing further pressure on the market, it was also explained.

The Nikkei's performance was reportedly driven by pessimism surrounding the US coupled with the strengthening of the yen after the latest rate hike by the Bank of Japan (BoJ).

In this scenario, the Dow fell 1,000 points at the New York Stock Exchange (NYSE), signaling imminent recession unless interest rates are cut as soon as possible, according to many experts. The Dow slipped 2.7% initially, mirroring similar drops in Japan's Nikkei's 4,451 points, the biggest-ever setback measured in points, which was also Japan's worst drop since 1987.

In addition, all major European stock markets neared six-month lows while the crypto market was also engulfed by the downward trend. Bitcoin closed 13% below Friday's quotation and Ether fell almost 17%.