Plummeting Japanese Market: Drops by 2%
Market Recap: Global Stocks Tumble, Nikkei 225 Dips Below 40,000
In a surprising turn of events, global stock markets experienced a significant dip on Monday, August 2, 2021. The Nikkei 225 Index, Japan's benchmark stock index, led the way with a decline of more than 2 percent, dropping below the 39,950 level.
The Nikkei's slide was accompanied by a similar downturn in other major indices. The French CAC 40 Index plummeted by 2.9 percent, while the German DAX Index took a 2.7 percent hit. In the U.S., the Dow Jones Industrial Average slumped 1.2 percent, closing at 43,588.58, and the Nasdaq Composite Index fell 2.2 percent, ending the day at 47,231.61.
Japanese stocks such as Honda, Toyota, and Panasonic saw losses, with Honda down 2.5 percent, Toyota losing more than 2 percent, and Panasonic, Sony, Canon, and Mitsubishi Electric all declining almost 3 percent each. Notable Asian companies like SoftBank Group, Mizuho Financial, and Credit Saison also experienced significant drops, with losses of 0.2 percent, almost 4 percent, and almost 6 percent respectively.
The decline in the Nikkei 225 Index, while not directly explained in the provided text excerpts, could be attributed to factors such as increased tariff concerns, disappointing corporate results, or inflation/fed policy worries that raise uncertainty and risk aversion. In contrast, the Nikkei's recent strength in 2025 was primarily due to diminishing tariff uncertainty with the U.S., strong U.S. inflation data reinforcing expectations of a Federal Reserve interest rate cut, and positive corporate earnings and confidence in Japan’s economic prospects.
Other economic indicators also showed a downturn. Banknotes in circulation were down 2.4 percent on year, and coins in circulation fell 1.4 percent. The current account balances shrank 4.3 percent on year, and crude oil prices fell due to demand concerns for potentially reduced consumption amid new tariffs from the U.S. government.
In the tech sector, Advantest and Screen Holdings experienced losses of more than 2 percent and 0.4 percent respectively. Fast Retailing, the parent company of Uniqlo, slid 3.5 percent, and Sumitomo Mitsui Financial and Mitsubishi UFJ Financial took hits of almost 5 percent each.
Recruit Holdings and KDDI, two prominent Japanese companies, also saw losses of more than 5 percent each. Yamaha, a Japanese multinational corporation, tumbled more than 8 percent.
The decline in global stock markets on August 2, 2021, serves as a reminder of the market's volatility and the importance of staying informed about economic indicators and geopolitical events.
The uncertainty and risk aversion in the industry caused negative impacts on several business sectors, leading to a decrease in stocks such as those of Honda, Toyota, and Panasonic in the finance market. The slump in the stock-market was not limited to Japan, as other major indices like the CAC 40, DAX, Dow Jones, and Nasdaq also experienced similar declines.
