Nikkei Index Plunges 4,500 Points Intraday... Largest Ever Decline (Update)

The Nikkei 225, Japan's representative stock market index, plunged more than 4,500 points intraday on the 5th amid concerns over a U.S. economic recession.

As of 2:53 PM, the Nikkei index was trading at 31,342, down 4,567 yen (12.72%) from the previous close. Kyodo News reported that the drop in the Nikkei index on this day was the largest ever, surpassing the 3,836-point decline on October 20, 1987, known as "Black Monday."

[Image source=EPA Yonhap News]

The cause of this sharp decline was attributed to the spreading concerns over a U.S. economic recession. Earlier, on the 2nd, the Nikkei index had also plunged nearly 6% due to a "triple shock." The worsening U.S. manufacturing and employment indicators increased recession fears, causing a sharp drop in the New York stock market, and semiconductor stocks, which had been driving the rally, fell sharply. The rapid appreciation of the yen also dampened investor sentiment due to concerns over poor earnings for Japanese export companies.

The Nikkei Volatility Index (VI), which indicates the expected volatility of the Nikkei index, surged to 50 at one point in the afternoon, marking the highest level since April 2020 during the pandemic.

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