Tokyo stocks suffered a catastrophic decline over the last trading session, with the Nikkei 225 index plummeting 5.81% to its lowest point in six months and facing the second-worst daily plunge since the infamous Black Monday crash of 1987.
The index closed at 35,909.70, erasing nearly 2,217 points in a single day, reflecting the previous day’s turmoil in U.S. equity markets that saw the Dow Jones Industrial Average tumble over 700 points at one point.
Fears of an economic slowdown grew after a disappointing manufacturing index, which triggered a sell-off that heavily affected the tech-heavy Nasdaq composite as investors started dumping amid an ongoing tech meltdown.
As CryptoGlobe reported, a group of seven megacap tech stocks – often referred to as the Magnificent 7 – has lost more than $2.6 trillion in value over the last 20 days, making for an average of $125 billion per day over the period. In total, these stocks lost “triple the value of Brazil’s entire stock market.”
That’s according to the economics outlet Kobeissi Letter, which noted on the microblogging platform X (formerly known as Twitter) that the Magnificent 7 lot “as much value as Nvidia’s entire current market cap in 20 days,” with Nvidia itself losing $1 trillion since its high.
Meanwhile the 10-year Treasury yield dropped below 4% after weak economic data points affected the market. The ISM Manufacturing Index showed the manufacturing sector in the US is contracting, while other data showed jobless claims in the country rose to an 11-month high.
The yen’s rapid appreciation against the dollar added fuel to the fire, placing immense pressure on Japan’s export-oriented companies. The currency briefly touched 148 yen to the dollar, exacerbating the sell-off in Tokyo.
The yen appreciated after Japan’s central bank, the Bank of Japan, hiked interest rates to 0.25%, the highest value in the country since the Great Financial Crisis of 2008, where interest rates reached 0.5%.
The crash could extend to other risk-assets including digital assets. Bitcoin’s price dropped more than 1.3% over the past 24-hour period to now trade at around $64,500. It’s down from a high near the $70,000 mark seen last month.
Historically, cryptocurrencies have maintained a strong correlation with traditional market trends. A looming recession, as suggested by the weak economic indicators, often precipitates a risk-off sentiment among investors.
As reported, however, the amount of Bitcoin on exchanges has been seeing an increase in outflows “despite the fact that Bitcoin has entered into a fluctuation area since February.”
Featured image via Unsplash.