Japanese stocks crash in biggest one-day drop since 1987 as global market rout intensifies

Hong Kong/London CNN —

Japanese stocks on Monday suffered their biggest daily loss since 1987 as fears about a US economic slowdown sent shock waves through global markets.

The Nikkei 225 index of leading stocks in Tokyo lost a staggering 4,451 points, its biggest point drop in history. On the more common, percentage measure, the index closed more than 12% down — according to Reuters, its largest one-day fall since October 1987. The drop took Nikkei’s losses since early July to 25%, pushing it into bear market territory.

“That was a crash. It smelled like 1987,” Neil Newman, head of strategy at Astris Advisory in Tokyo, told CNN. He was referring to “Black Monday” in October 1987, when global markets plunged and the Nikkei lost 3,836 points.

Fears of a sharp slowdown in the US economy have raised expectations that the Federal Reserve will have to slash interest rates. Coming as the Bank of Japan takes its interest rates higher to contain inflation, that is boosting the value of the yen against the US dollar and making Japanese export-dependent stocks less attractive.

At the same time, tech stocks are being hammered by a combination of mixed earnings and increasing skepticism among some investors about the hype around artificial intelligence.

“The buzz is all about the contagion effect of this aggressive bear onslaught, underscored by fears of a hard landing in the US and a severe meltdown in Tokyo’s markets, which now appear to be self-perpetuating,” said Stephen Innes, managing partner of SPI Asset Management.

Trading was halted for short periods of time in Japan and South Korea as circuit breakers designed to prevent panic selling were triggered multiple times.

“(Today) was relentless,” said Newman. “It was