TOKYO: Japanese stocks sank on Friday to their lowest since last August, marking their sharpest weekly drop in five years, as fears of a global recession in the wake of US President Donald Trump’s sweeping tariffs gripped markets.
The Nikkei average closed down 2.75%, registering a 9% drop for the week, its steepest weekly decline since March 2020. The index also hit its lowest since early August during the session.
The index is down 20% from its peak in July, meaning it is in bear market territory per some market definitions.
The brutal selloff came after Trump announced on Wednesday Washington’s steepest trade barriers in more than 100 years, sending investors scrambling for safe-haven assets, including the yen, which added further pressure on Japanese stocks.
The rout was led by banking stocks as the spectre of tariffs and their potential impact on economic growth stoked speculation that the Bank of Japan may need to delay rising interest rates.
The banking index fell over 8% on Friday, recording a 20% decline for the week, its worst weekly performance on record, according to LSEG data.
The broader Topix closed down 3.3% and clocked a 10% drop for the week, its biggest weekly decline since March 2020.
Japanese bank shares recently gained popularity among investors betting on rising BOJ rates.
All but three of the Tokyo Stock Exchange’s 33 industry sub-indexes dropped on Friday, with the banking index down 11%, making it the worst performer and triggering a circuit breaker.
The banking index was on track for a decline of more than 20% this week, its worst weekly performance on record.
Comments
Comments are closed for this article.