TOKYO - Japan’s Nikkei Stock Average plunged by 2,644 yen in a single day, marking the third-largest one-day drop in its history. The sharp downturn, driven by intensifying trade tensions between the United States and China, has been widely labeled the "Trump Shock" by investors and analysts.
The sell-off, which rattled markets across Asia and Europe, came amid fears that China's retaliatory tariffs against U.S. imports could escalate into a global trade war. The steep decline sent shockwaves through a growing base of retail investors, many of whom had recently begun investing under Japan’s new NISA program.
Investor sentiment in Tokyo was grim throughout the day. Some likened the turmoil to the 2008 Lehman Shock, pointing to its severity and speed. One investor in his 30s lamented a loss of around 8 million yen over the past two months, while others reported five- to six-digit losses in yen. The market downturn was not limited to individual names, as Nintendo shares plummeted after announcing a delay in U.S. preorders for its upcoming Switch 2 console. Banking stocks also fell sharply, contributing to the widespread decline that pushed the Nikkei to its lowest level in about a year and a half.
Adding to the anxiety was the broader global impact. The Dow Jones Industrial Average in the U.S. had already posted its third-largest market-cap decline by value, erasing roughly 970 trillion yen worldwide. South Korea’s stock index fell more than 5%, while Hong Kong’s markets dropped over 10%. Investors in Japan, already reeling from domestic losses, looked abroad with growing concern as Europe’s London market opened with a heavy drop.
Despite the turmoil, former President Donald Trump downplayed the damage, comparing tariffs to "medicine" that must be taken for the greater good. His remarks did little to reassure rattled investors. Retail traders who had turned to foreign equities or digital points platforms, such as PayPay, also reported losses. A man in his 30s using PayPay points for overseas stock investments said he was facing an unrealized loss of about 5,000 yen.
Shingo Ide, Chief Equity Strategist at the NLI Research Institute, warned that if other countries follow China's lead in imposing retaliatory tariffs, the situation could worsen significantly. He cautioned that in a scenario where the U.S. faces united retaliation from multiple nations, the Nikkei could fall below the 30,000 yen threshold.
As of the evening, Dow futures were already showing a decline of over 1,000 dollars compared to last week’s close, indicating that the market volatility is likely to continue through the night and into the following trading day. Investors across Japan and abroad remain on edge, uncertain about how far the current slide will go and what further shocks may be in store.
Source: TBS
