Japan is currently facing significant economic distress. On...

Japan is currently facing significant economic distress. On Monday, Japanese stocks recorded their largest daily loss since 1987, as concerns over a potential U.S. economic downturn reverberated across global markets. The Nikkei 225 index plummeted by an unprecedented 4,451 points, marking its most substantial point decline ever. In percentage terms, the index finished over 12% lower, its sharpest one-day drop since the infamous "Black Monday" in October 1987. This downturn has extended the Nikkei's losses to 25% since early July, categorizing it as a bear market.

The event has been likened to a crash, reminiscent of "Black Monday" when global markets collapsed, and the Nikkei shed 3,836 points.

The U.S. economy's anticipated slowdown has led to predictions that the Federal Reserve will cut interest rates. This comes as the Bank of Japan is increasing its rates to curb inflation, which in turn strengthens the yen against the U.S. dollar, diminishing the appeal of Japanese exports.

Concurrently, technology stocks are suffering due to a mix of inconsistent earnings and growing doubts among investors about the overhyped artificial intelligence sector and fears of a U.S. recession. The market is abuzz with talk of the contagion effect of this aggressive bear market, amplified by concerns of a severe downturn in the U.S. and a drastic collapse in Tokyo's markets, which are fueling each other.

Trading was intermittently suspended in Japan and South Korea as circuit breakers, meant to avert panic selling, were activated several times.

The relentless trading saw traders repurchasing shares they had previously sold short.

This volatility has spread to other Asian and European markets, with U.S. stock futures also taking a significant hit overnight. Nasdaq futures dropped by 4%, while Dow futures and S&P 500 futures decreased by 1.5% and 2.3%, respectively.