Japanese stocks collapsed on Monday in their biggest single day rout since the 1987 Black Monday sell-offs, driven by last week's plunge in global stock markets, economic concerns and worries investments funded by a cheap yen were being unwound. The Nikkei share average shed a staggering 12.4% as Friday's dismal jobs data heightened worries of a possible recession, and as the yen rallied to 7-month highs versus the dollar.
From July 11 to Monday's close of 31,458.42, Nikkei has wiped out $792 billion of that peak market value. "The rapid move in the yen is putting downward pressure on Japanese equities, but it's also driving an unwind of a major carry trade - investors had leveraged up by borrowing in yen to buy other assets, chiefly U.S. tech stocks," said Kyle Rodda, a senior financial market analyst at Capital.com in Melbourne.
Japanese Finance Minister Shunichi Suzuki said the government was monitoring markets with "grave concern". "It's hard to say what is behind the decline in stocks," Suzuki told reporters.