Japanese stocks have recorded their biggest losses since October 1987, extending last week’s sell-off spurred by concerns the United States’ economy may be weaker than previously thought.

The Nikkei share average was down 10.01 percent or 3,595.30 points to 32,314.40 in the early afternoon, its lowest in months.

The index has dropped sharply from its peak in July, and is on course for its biggest two day plunge ever.

“Domestic equities tanked purely because of the worries that the US economy may be heading to a recession,” said Shoichi Arisawa, general manager of the investment research department at IwaiCosmo Securities.

US stocks sold off for a second straight session on Friday after a weak jobs report raised fears of an oncoming recession and expectations that the Federal Reserve will make a hefty rate cut in September.

The prospect of lower interest rates weighed on the dollar, boosting the yen.

The Japanese currency was up nearly 1 percent at 145.11 per dollar after touching its highest since mid-January of 144.76 earlier in the session.

“I think the dollar-yen will shift to the 140-145 zone because of the worse-than-expected non-farm payroll and Middle East tensions,” said Ryota Abe, an economist with SMBC in Singapore.

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