A sell-off in markets around the world turned into a rout on Monday as investors grew panicky about signs of a slowing American economy, with stocks tumbling across Asia and Europe.
The moves marked a sharp reversal in the world’s major markets, which for much of the past year have risen to new heights, propelled by optimism about cooling inflation, solid labor markets and the promise of artificial intelligence technology.
The declines were especially pronounced in Japan, where fears about the global economy added to other concerns about the blow a strengthening yen could deal to corporate profits.
The Nikkei 225 index, considered the benchmark for stocks in Japan, fell 12.4 percent. It was the index’s biggest one-day point decline, larger than the plunge during the Black Monday stock market crash in October 1987. The Topix index, which includes companies that represent a broad swath of the country’s economy, fell 12.2 percent.
The Pan-European Stoxx index fell nearly 3 percent in early trading, with every major market on the continent recording declines.
The drops followed a U.S. jobs report on Friday that indicated that employers had slowed hiring significantly in July, with unemployment rising to its highest level in nearly three years. This deepened fears that the economy was cooling and that the Federal Reserve may have waited too long on cutting interest rates.
Based on the weakness in the jobs report, Goldman Sachs said in a note that it now expects the Federal Reserve to cut interest rates at its next three meetings — a more aggressive timetable for cuts than the investment bank had previously expected.
South Korea’s benchmark Kospi index fell more than 10 percent at one point. Equity markets in Taiwan, Singapore, Australia, Hong Kong and mainland China were all lower. Stocks in India, one of the best performing markets in Asia this year, traded about 3 percent lower.
Technology shares were hit particularly hard. The semiconductor giants Samsung Electronics and Taiwan Semiconductor Manufacturing Company each fell 10 percent.
The losses were set to continue in the United States. Stock futures for the S&P 500 were down more than 3 percent, and those for the Nasdaq fell 6 percent.
Bitcoin, the biggest cryptocurrency, plummeted more than 10 percent in another sign of investor anxiety.
At one point, the plunge in Japanese and Korean stocks triggered a “circuit breaker” mechanism that halts trading to allow markets to digest large fluctuations. But even after those mandatory breathers, the sell-off in stocks seemed to accelerate. Jitters spread to the debt market, prompting a halt in trading in Japanese government bonds as well.
“The market response is a reflection of the deteriorating U.S. economic outlook,” said Jesper Koll, a director at financial services firm Monex Group. “It was a New York sneeze that forced Japanese pneumonia.”
Mr. Koll said the prognosis is more bleak for Japan, because a strengthening yen will be a drag on corporate profits especially for many of the country’s biggest companies that rely on selling abroad. He said investors usually swoop in to pick up stocks when prices fall significantly, but “what is concerning is that we are not seeing buyers.”
The Topix is down more than 20 percent from last Wednesday, when the Bank of Japan raised interest rates for only the second time in nearly two decades.
Japanese stocks have been on a tear for more than a year, fueled by a weak Japanese yen. The yen’s depreciation had helped to inflate the earnings of Japanese exporters, but the currency has strengthened considerably over the past week.
Adding to the pressure, foreign investors have started selling off positions in Japanese stocks over the last few weeks. In the most recent data from the Tokyo Stock Exchange, foreign investors sold nearly $4 billion more in Japanese equities than they purchased during the week ending July 26. In the week prior, they were net sellers of $1.5 billion of equities.
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