Japan’s Nikkei, TOPIX plummet over 13% into bear market

Investing.com-- Japan’s Nikkei 225 and TOPIX indexes closed down over 13% each on Monday, with both indexes ending comfortably in bear market territory and also wiping out all of their gains so far in 2024. 

The Nikkei 225 closed down 13.5% at 31,078.0 points, while the TOPIX ended down 12.2% at 2,227.15 points. They both marked their weakest close since November, and were down over 25% each from record highs hit in July. 

Losses in Japanese markets came amid a broader risk-off rout in global markets, which was initially triggered by a swathe of weak U.S. economic data that pushed up concerns over a recession.

But Japanese markets were hit particularly hard by the sell-down, especially after the Bank of Japan hiked interest rates and struck an unexpectedly hawkish chord. 

The prospect of higher Japanese interest rates unwound a bulk of recent gains made by Japanese markets, as markets began pricing in higher interest rates and less accommodative monetary conditions in the country.

The Japanese yen appreciated sharply on this notion, further pressuring export-oriented Japanese stocks, which make up a bulk of valuations on the Nikkei and TOPIX. 

The yen was also supported by safe haven demand as broader Asian markets plummeted. 

Profit-taking in technology stocks- amid an unwinding of the artificial intelligence trade- also pressured Japanese markets.