BANGKOK — Japan’s benchmark Nikkei 225 stock index plunged 6.7% early Monday before recovering some lost ground, extending sell-offs that began last week.
The Nikkei had shed more than 2,400 points to 33,488.08 about a half-hour after opening. By about an hour after trading began, the index was down 5.3%, or about 1,900 points, at 34,010.69.
Stocks tumbled Friday on worries the U.S. economy could be cracking under the weight of high interest rates meant to tame inflation.
A report showing hiring by U.S. employers slowed last month by much more than expected has convulsed financial markets, vanquishing the euphoria that had taken the Nikkei to all-times highs of over 42,000 in recent weeks.
The S&P 500 sank 1.8% on Friday for its first back-to-back losses of at least 1% since April. The Dow Jones Industrial Average dropped 610 points, or 1.5%, and the Nasdaq composite fell 2.4% as stocks retreated around the world and back to Wall Street.
The rout began just a couple days after U.S. stock indexes had jumped to their best day in months after Federal Reserve Chair Jerome Powell gave the clearest indication yet that inflation has slowed enough for cuts to rates to begin in September.
Now, worries are rising the Fed may have kept its main interest rate at a two-decade high for too long, raising risks of a recession in the world’s largest economy. A rate cut would make it easier for U.S. households and companies to borrow money and boost the economy, but it could take months to a year for the full effects to filter through.
Worries over weakness in the U.S. economy and volatile markets have rippled around the world, even though the U.S. economy is still growing, and a recession is far from a certainty.
The Nikkei 225 dropped 5.8% on Friday. It has struggled since the Bank of Japan raised its benchmark interest rate on Wednesday. The hike pushed up the value of the Japanese yen against the U.S. dollar, which could hurt profits for exporters and deflate a boom in tourism.
Early Monday, the dollar was trading at 145.50 yen. That’s sharply below its level of over 160 yen a few weeks ago.
Chinese stocks fell Friday as investors registered disappointment with the government’s latest efforts to spur growth through various piecemeal measures, instead of hoped-for infusions of broader stimulus, while stock indexes dropped by more than 1% across much of Europe.
