Nikkei 225 and KOSPI Index Hit Hard As Global Markets Pull Back

The world's financial markets are reeling from one of the most tumultuous starts to a trading week in recent history. Early movers in Asian markets show the Nikkei 225 Index in Japan taking a nosedive of 12.4%, resulting in its worst session since the 2011 Fukushima nuclear disaster. Today's move puts the index firmly in the red on a YTD basis, down 5.5% as months of gains have been wiped out in a matter of days.

The increasing value of the JPY against USD, along with US data from Friday now being actionable in Asia have hit hard to start the week firmly amidst a sea of red. The Nikkei had spent the first 7 months of the year building 17.48% of gains, only for the last 3 trading sessions to hit the index for a 19.55% fall.

South Korea's KOSPI index wasn't spared as it shed 8.77% to also go red on the year, triggering circuit breakers designed to halt trading during significant drops. The KOSPI had previously added 4% on a YTD basis, prior to the last 2 trading sessions delivering a drop of 12.1%.

Meanwhile, Australia's ASX 200 wasn't far behind, with a fall of nearly 4%, marking its poorest performance since June of the previous year.

The avalanche of sell-offs spanned continents, pulling down major European indices such as the FTSE 100 in the United Kingdom, France's CAC 40, and the DAX in Germany. The repercussions of this downturn reflect a global market that is increasingly interlinked and reactive to geopolitical and economic stresses.

In the US, future contracts indicated a grim beginning to the week, with S&P 500 futures down by 3% and Nasdaq 100 contracts indicating close to 5% in losses. It's clear that the mood amongst investors is one of caution and concern, as seen in the pre-market movements.

Traditionally, in times of market anxiety, certain assets like gold and bitcoin attract investors looking for shelter from the storm. However, this conventional wisdom did not hold true in the current climate, as both failed to see the influx of capital that typically accompanies such downturns, signalling a deeper reticence among investors.