Historic Plunge: Japanese Stocks’ Worst Rout Since 1987 Crash

Japanese stocks experienced their largest single-day drop since the 1987 Black Monday crash. The Nikkei index fell 12.4% amid global market declines, economic concerns, and an appreciating yen. The banking sector was hit hardest, with Nikkei losing 113 trillion yen from its July peak. Analysts attribute the collapse to mass deleveraging.

Japanese stocks took a nosedive on Monday, marking their most significant single-day drop since the 1987 Black Monday market crash.

The Nikkei share average plunged 12.4%, spurred by last week's global market collapses and domestic economic worries, as well as the unwinding of investments funded by a cheap yen.

The banking sector led the downturn, pushing Nikkei into bear market territory with a staggering 27% decline from its July 11 peak, wiping out 113 trillion yen ($792 billion) in market value. Notably, the index shed 4,451.28 points, eclipsing the 3,836.48-point drop during the 1987 crash.

Experts, like Kyle Rodda from Capital.com, attribute the collapse to a rapid yen rally and mass deleveraging as investors sold off assets to cover losses.

The entire 'value' trade in Japan, sustained by yen-funded carry trades, is being unwound, exacerbating the sell-off. Similarly, U.S. stocks saw a second consecutive sell-off, and Nasdaq entered correction territory after dismal jobs data fueled recession fears.

Banking sector stocks plummeted 17% on Monday, making it the worst performer among Tokyo Stock Exchange's sub-indexes. Big names such as Tokyo Electron, Fast Retailing, and SoftBank Group saw significant losses.

(With inputs from agencies.)