Seoul, South Korea :  On Monday, Japanese stock markets faced a historic plunge, with the Nikkei 225 index experiencing its largest one-day point drop ever, falling 12.4%. This decline, reminiscent of the 1987 "Black Monday" crash, was driven by concerns over a strengthening yen and the possibility of a U.S. recession. To curb the panic, Japan's trading was halted after circuit breakers were triggered. South Korea and Taiwan also saw significant drops, with Taiwan's stocks plummeting over 8% and Taiwan Semiconductor Manufacturing Company’s shares falling nearly 10%.

The sell-off was exacerbated by a disappointing U.S. jobs report released on Friday, raising fears that the Federal Reserve might have been too slow in lowering interest rates. Japan's market turmoil is seen as a correction following recent interest rate hikes, which challenged the previously favorable conditions for risky investments. Analysts suggest that the market's drastic reaction reflects an overreliance on Japan’s low rates and cheap money.

Khoon Goh of ANZ Research described the situation as a market adjustment rather than a severe economic crisis. He downplayed recession fears, noting that the U.S. economy was considered robust until recently. The Federal Reserve’s recent decision to maintain interest rates, with a potential cut next month, aims to manage inflation without causing a recession. Goldman Sachs increased the likelihood of a U.S. recession in the next year to 25%, but still considers the risk manageable with the Federal Reserve’s tools.