Japan’s stock market experienced a sharp decline on Monday, with the Nikkei share average plummeting nearly 9% as fears of a global recession intensified due to new tariffs. This marked a significant drop, with the Nikkei hitting 30,792.74 points, its lowest level since October 2023. By midday, the index had moderated slightly but still reflected a 6.5% loss at 31,591.84 points. Notably, every one of the 225 listed stocks in the Nikkei was down.

Widespread Market Decline

The Topix index, which offers a broader view of the Japanese market, witnessed a staggering decline, dropping as much as 9.6% before also settling down 6.5% for the morning. This widespread downturn has raised alarms among investors, particularly in the banking sector, where stocks fell dramatically.

• Banking shares plunged by as much as 17.3%, recovering slightly to a 9.8% decline by midday.
• Over the past three trading days, banks have lost nearly 25% of their total market value.

The Impact of Tariffs

President Donald Trump, speaking from Air Force One, described the latest tariffs as "medicine" to balance trade disparities, indicating a readiness to weather market turbulence. Since the announcement of these unexpected tariffs, the Nikkei has dropped 11.6%, while the U.S. S&P 500 has decreased by 10.6%.

Maki Sawada, an equities strategist at Nomura Securities, emphasized the uncertainty that currently grips the market. "The lack of clarity over tariffs and each country’s response means the market will likely remain under pressure," Sawada noted. However, he also pointed out that if there are signs of flexibility regarding tariffs or new economic support measures, "we might see a bottom forming in the market."

Banking Sector in Crisis

The Japanese banking sector has been particularly hard hit. Resona Holdings led the decline among lenders, experiencing a 12.2% drop. Other major banks like Mizuho and Nomura also faced significant losses, with shares falling 11.3% and 10.9%, respectively.

Rikki Malik, a portfolio manager at Springboard Capital, remarked on the current market sentiment: "It’s a sell-anything environment, particularly for stocks that have previously performed well. However, I believe we are approaching a point of capitulation, and a rebound is likely soon."

Technology Sector Takes a Hit

The downturn extended beyond financial stocks, hitting the technology sector hard. Notable chipmakers suffered considerable losses:

• Renesas saw a 14.8% decline.
• Sumco dropped 14.4%.
• Tokyo Electron, a leading manufacturer of chip-making equipment, fell by 8.6%.

As investors grapple with the ramifications of these tariffs and the broader economic outlook, the market remains volatile, leaving many to wonder what the future holds for Japan’s economy.