Nikkei Today: Tokyo's Nikkei Index Falls 3% Following Global Market Slump

Tokyo's Nikkei index fell by over three percent on Monday due to weaker-than-expected US jobs growth and speculation about a potential Federal Reserve rate cut, which led to a global market downturn.

The benchmark Nikkei 225 dropped 3.02 percent, or 1,098.77 points, to 35,292.70 in early trading, while the broader Topix index declined 2.67 percent, or 69.28 points, to 2,528.14. The dollar was trading at 142.60 yen, up from 142.29 yen on Friday in New York.

"Japanese markets are likely to open with a significant drop due to losses in US markets and concerns over the strong yen," said Toshiyuki Kanayama, senior market analyst at Monex brokerage.

Japan's currency has recently strengthened amid speculation about a potential US Federal Reserve interest rate cut and increasing expectations that the Bank of Japan will continue to raise its own borrowing costs.

US jobs data fell short of analyst expectations on Friday, indicating a slowing economy and leading to a drop in share prices.

"Global uncertainties and a suddenly stronger yen are weighing on the index, exacerbating the risk-off sentiment prevailing in the markets," noted Stephen Innes in his Dark Side of The Boom newsletter. In Tokyo, semiconductor stocks took a hit, with Tokyo Electron falling 5.77 percent to 20,730 yen and Advantest decreasing 5.85 percent to 5,525 yen.

Automakers experienced declines, with Toyota dropping 3.14 percent to 2,501.5 yen and Honda losing 3.47 percent to 1,474.5 yen. In contrast, Seven & i Holdings, the Japanese parent company of the 7-Eleven convenience store chain, saw a 2.84 percent increase to 2,194 yen. This rise followed a Bloomberg News report indicating that Canadian retail giant Alimentation Couche-Tard remains "highly focused" on finalising a takeover deal.

This news came after Seven & i announced on Friday that it had rejected an initial offer from Couche-Tard, deeming the proposal "grossly undervaluing’’ for the company.