Asian markets recover a day after plunge

Japan’s stock market rebounded on Tuesday, a day after a steep fall amid a global rout wiping off trillions of dollars in market cap.

The Nikkei 225 index surged by over 10% to reach 34,675 points. Other Asian markets also showed some recovery — China’s Shenzhen SE Index gained 0.43%, KOSPI Index 3.55%, India’s BSE-100 0.84%, and Pakistan’s KSE-100 0.86%, while Taiwan’s market was also up.

Asian markets experienced a significant downturn on Monday, driven by escalating tensions in the Middle East, Japan’s sudden interest rate hike, and disappointing United States employment data.

Last week, Japan’s central bank increased the interest rate to 0.25% from 0.1%.

Meanwhile, the latest US jobs report showed that nonfarm payrolls increased by just 120,000 in July, significantly below market expectations of 200,000.

According to the Sahm rule developed by macroeconomist Claudia Sahm, a recession might be setting in when the unemployment rate rises significantly compared to its lowest point in the previous year. The recent uptick in US unemployment suggests that the economy may be heading towards a downturn.

The interest rate development led to the Nikkei 225 plummeting by 12.4% on Monday. Other major indices also suffered substantial losses — the KOSPI 200 fell by 9.12%, the Taiwan TAIEX Index 8.35%, and India's BSE-100 2.77%.

The Shanghai SE A Share Index and Hang Seng Index saw more moderate declines of 1.54% and 1.46%, respectively. Meanwhile, the Tadawul All Share Index in Saudi Arabia slipped by 1.76%. Pakistan’s KSE-100 index also dropped 1.5%.

The US stock market also witnessed a significant plunge on Sunday. S&P 500 slid 3%, its worst day since September 2022. The Dow Jones Industrial Average declined 2.79%. The tech-heavy Nasdaq Composite Index experienced a sharper drop, losing 4.05%.

According to Bloomberg, this global rout wiped off $6.9 trillion in market cap.

Moreover, crude oil and gold both lost 1% in value while Bitcoin fell 8.4% to $54,190.

Overall, the cryptocurrency market plunged on Sunday, shedding around $270 billion in value over a 24-hour period.