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Market jitters rise following disappointing job market data
Significant miss on payrolls data impacts economic soft-landing expectations.
Markets are now pricing in a 50-basis point cut in September.
Japan’s Nikkei 225 drops 13%, TOPIX falls nearly 7%, signalling possible bear market.
USD/JPY near 142.88, yen up 14% against dollar, influenced by recent BOJ rate hike to 0.25%.
Market panic
Markets followed a downturn in Wall Street on Friday after significantly weaker-than-expected nonfarm payrolls data hindering the widely expected soft economic landing. Markets are now pricing in a full 50 basis point cut in September.
Goldman Sachs analysts have raised expectations to 3 quarter point cuts starting September too.
Additionally, mixed earnings from major technology stocks further pressured U.S. markets causing Asian markets to falter this Monday morning.
Japan’s Nikkei 225 dropped by 13%, marking a level of losses not experienced since the 2011 global financial crisis and the broader TOPIX dropped nearly 7%. Both indexes are now trading more than 20% below their record highs from July, positioning them to enter a bear market if they close at current levels.
Meanwhile, the yen continues to claim the highest levels against the dollar, The USD/JPY pair was last seen near 142.88 after touching lows near 141.72. The yen has surged 14% against the dollar over the past three weeks, partly due to the Bank of Japan's significant 15 basis point rate increase last week to 0.25%.
