Japan Stocks Plunge Nearly 6%, Worst Since COVID-19 Pandemic

Japanese stocks plunged on Friday as global markets were rattled by concerns over the US economy and traders braced for further interest rate hikes from the Bank of Japan (BOJ), Laura He reported for CNN.

On Wednesday, the BOJ raised interest rates by 15 basis points to 0.25% in its second hike this year and announced plans to taper its bond-buying program. I Photo: ynkanazawa1999 Flickr

The Nikkei 225 ended 5.8% lower, marking the index’s biggest daily drop since March 2020. This extended a global stock rout that began following the release of weak US economic data.

The Japanese benchmark had already lost 2.5% on Thursday and has now closed at its lowest level since January.

European markets also opened lower on Friday. The benchmark Stoxx Europe 600 index was down 1.4%, with Germany’s DAX and France’s CAC 40 down 1.2% and 0.6%, respectively.

London’s bank-heavy FTSE 100 was 0.4% lower. US futures were also indicating another weak open for Wall Street, with S&P 500 futures down 0.9%.

On Wednesday, the BOJ raised interest rates by 15 basis points to 0.25% in its second hike this year and announced plans to taper its bond-buying program. Traders expect more rate hikes later this year as the central bank attempts to contain inflation.

“The BOJ made a hawkish shift after its surprising 15 basis point rate hike,” said Ken Cheung, Director of Foreign Exchange Strategy at Mizuho Securities.

“The BOJ flagged inflation upside risks and left the door open for further rate hikes,” Anna Cooban and Krystal Hur also reported for CNN.