Global Markets Face a Turbulent Start as Japan’s Stocks Plunge While Chinese Markets Surge

Global markets experienced a volatile beginning to the week, with Tokyo’s Nikkei 225 index dropping nearly 5% and Chinese markets soaring on news of fresh stimulus measures for the faltering economy. The Shanghai index saw an impressive rise of over 8%, contrasting sharply with the Japanese market’s struggles.

In early European trading, France’s CAC 40 dropped 1.0% to 7,711.66, Germany’s DAX slid 0.4% to 19,399.02, and London’s FTSE 100 declined by 0.3% to 8,294.70. Meanwhile, the futures for the S&P 500 and Dow Jones Industrial Average edged 0.1% lower.

Japan’s market turmoil followed the election of former Defense Minister Shigeru Ishiba as leader of the ruling Liberal Democrats, replacing Prime Minister Fumio Kishida. Ishiba’s support for raising interest rates and corporate taxes—a stark departure from his rival Sanae Takaichi’s more market-friendly approach—led to the Nikkei closing 4.8% lower at 37,919.55 on Monday.
Exporters were hit hard as the yen strengthened, with the dollar dropping from over 146 yen to 143 yen. Major carmakers such as Toyota, Honda, and Nissan saw their shares tumble, with declines of 7.6%, 7.0%, and 6.0% respectively.

Chinese Markets Rally Amid Stimulus Efforts

In contrast to Japan’s struggles, Chinese markets soared, with Hong Kong’s Hang Seng climbing 2.4% and the Shanghai Composite Index surging 8.1%. The smaller Shenzhen market saw even greater gains, rising nearly 11%. These rallies came just ahead of a week-long national holiday celebrating 75 years of communist rule in China.

China introduced key measures over the weekend aimed at stabilizing its property market and reviving lagging financial markets. Mortgage rates were slashed, and major cities like Guangzhou, Shanghai, and Shenzhen eased home purchase restrictions to stimulate growth. Despite these efforts, China’s manufacturing sector continues to face challenges, with September marking the fifth consecutive month of contraction.
Elsewhere in Asia, Australia’s S&P/ASX 200 rose 0.7% to 8,269.80, while South Korea’s Kospi fell 2.1% to 2,593.27. In the U.S., the S&P 500 and Nasdaq composite saw slight declines on Friday, while the Dow Jones Industrial Average set a new record.

In global markets, tensions in the Middle East caused oil prices to rise after Israel launched its first airstrike on Lebanon in nearly a year. U.S. crude added 49 cents to $68.67 per barrel, and Brent crude rose 61 cents to $72.15 per barrel. On the currency front, the euro was trading at $1.1193, up from $1.1163.

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