Japan’s Nikkei share average nosedived on Monday to its lowest level in a year and a half, as growing fears of a global recession triggered by sweeping U.S. tariffs sent investors fleeing from equities—particularly bank and tech stocks.
The Nikkei 225 index dropped as much as 8.8% during the day to hit 30,792.74, its lowest level since October 2023, before closing 7.8% lower at 31,136.58. All 225 constituents of the index ended the day in negative territory. The broader Topix index slumped 7.8%, after earlier falling as much as 9.6%.
The sharp sell-off follows U.S. President Donald Trump’s announcement last week of a sweeping new round of reciprocal tariffs, affecting nearly every country exporting to the United States. Speaking aboard Air Force One on Sunday, Trump described the tariffs—which range from 10% to 50%—as “medicine,” and signaled his willingness to tolerate the market fallout.
“It’s extremely difficult to judge how far this stock market correction will run [but] as long as there exists a lack of clarity around tariffs and each country’s response, the market will remain heavy,” said Maki Sawada, equities strategist at Nomura Securities.
The banking sector bore the brunt of the sell-off. A Topix index of banking shares plummeted as much as 17.3% before closing down 10%. Over the past three sessions, Japanese banks have collectively lost nearly a quarter of their market value, amid concerns that the tariffs could choke off global growth and keep domestic interest rates lower for longer.
“This is a sell-anything-that-has-made-money move,” said Rikki Malik, a portfolio manager at Springboard Capital. “Banks [are] at the forefront of that. However, I think we are close to capitulation and will see a bounce very soon.”
Among major financial stocks, Nomura Holdings tumbled 13.2%, Mizuho Financial Group fell 10.7%, and Mitsubishi UFJ Financial Group dropped 10.4%. The sell-off extended to the tech sector, with Renesas Electronics plunging 16.7%, Sumco Corp. sliding 15.8%, and chip-testing equipment giant Advantest falling 11%.
The losses follow a broader global market rout. Since Trump’s announcement, the Nikkei has fallen 11.6%, while the U.S. S&P 500 has lost 10.6%. Still, some analysts see room for recovery if Washington or other major economies signal flexibility.
“The market currently is only pricing in bad news,” said Sawada. “If there are signs of flexibility on trade policies or the announcement of economic support measures, it’s highly likely we’ll see a bottom form in the market.”
The sharp decline comes as policymakers across Asia scramble to respond to the rapidly evolving trade environment, with countries like Vietnam, Thailand, and Indonesia turning to diplomacy, and others reconsidering their economic forecasts in light of escalating uncertainty.