Asian markets experienced a sharp decline on Monday as concerns over a potential U.S. recession and escalating tensions in the Middle East weighed heavily on investor sentiment. The downturn in Asian equities followed a significant sell-off in U.S. markets, triggered by disappointing economic data that heightened fears of an impending economic slowdown.
The Nikkei Index in Japan suffered the most severe drop, plunging by over 13.1% during morning trading. Hong Kong’s Hang Seng Index fell by 2.57%, and India’s S&P BSE Sensex Index declined by 2.83%. Technology-heavy markets in Taiwan and South Korea also experienced significant losses.
In the Middle East, the Dubai Financial Market’s main equities gauge dropped by 4.4%, while the Abu Dhabi Securities Market and Saudi Arabia’s Tadawul Index each fell by 2.4%.
The market turbulence comes as global investors brace for the potential fallout of a broader conflict in the Middle East. Rising geopolitical tensions, particularly between Israel and Iran, have added to the growing uncertainty. Reports of possible military action by Iran and Hezbollah against Israel have intensified concerns about the region’s stability.
The sell-off in Asian markets mirrors the steep declines in U.S. stocks last week, where the S&P 500 and Nasdaq 100 fell by 1.8% and 2.4%, respectively. The disappointing U.S. jobs report, which showed a significant drop in job creation and a rise in the unemployment rate, has fueled fears of a recession in the world’s largest economy.
The MSCI Asia Pacific Index, which tracks regional equity performance, dropped by as much as 3.8% on Monday, bringing it close to erasing its gains for the year. The index has now fallen nearly 10% from its peak in mid-July, signaling a technical correction.
European markets were not immune to the global sell-off, with London’s FTSE 100 Index and the Stoxx Europe 600 Index both experiencing significant losses. The FTSE 100 dropped by over 2%, while the Stoxx 600 fell by as much as 3.2%, marking its largest intraday decline since March 2022.
As global markets continue to react to the confluence of economic and geopolitical risks, investors remain cautious, with many turning to safe-haven assets in response to the growing uncertainty.