Nikkei 225 Index followed the trend in the global markets and selling was evident across the board. A global market downturn deepened on Friday, with Japan’s Nikkei 225 falling for a fourth consecutive day, pressured by a stronger yen and heightened caution ahead of U.S. jobs data. The index dropped to a three-week low, while Chinese and Indian markets also faced losses. Investors are bracing for potential volatility, driven by expectations of an interest rate cut by the U.S. Federal Reserve in response to weaker employment data. Additionally, concerns over global oil demand added to market jitters, as crude prices remained under pressure amid worries about a potential economic slowdown.

Nikkei 225 Falls for Fourth Consecutive Day

The Nikkei 225 fell for the fourth consecutive day on Friday, dropping 265.62 points, or 0.72%, to close at 36,391, its lowest level since August 13. Exporters were hit hard as the yen strengthened, compounding losses in the broader Tokyo market. The broader Topix index also fell, losing 23 points, or 0.89%, to finish at 2,597.

Stronger Yen Pressures Exporters

A stronger yen, which appreciated to a one-month high of 142.07 against the U.S. dollar, pressured Japanese exporters by reducing overseas earnings when converted back to yen. Investors flocked to the yen as a safe-haven asset following weaker-than-expected U.S. employment data. The yen's strength added further pressure on machinery, iron, steel, and electric appliance stocks, which led the decliners on the Prime Market.

Investors Await U.S. Jobs Data

Global markets remained on edge ahead of the release of the U.S. jobs report, which is expected to shed light on the strength of the American economy. Investors are awaiting the data to gauge whether the U.S. Federal Reserve will implement a 0.25 or 0.50 percentage point interest rate cut at its upcoming meeting. There is widespread concern that a weaker-than-expected report could exacerbate fears of a potential recession, triggering further declines in global markets.

Technology Stocks Hit by Semiconductor Index Decline

The Nikkei benchmark was further weighed down by technology shares, which tracked an overnight decline in a key U.S. semiconductor index. Major Japanese tech stocks mirrored this trend, with investor sentiment particularly fragile due to the uncertainty surrounding U.S. monetary policy and economic data.

U.S. Dollar Slides Amid Rate Cut Speculation

The U.S. dollar slid to 142.07 yen, marking a one-month low in Tokyo trading, as speculation about an aggressive Federal Reserve rate cut gained momentum. The dollar’s weakness further compounded the losses for Japanese exporters, and some analysts believe that a significant miss in the U.S. jobs data could trigger a rapid slide of the dollar, leading to further equity sell-offs.

China’s Markets at 7-Month Lows

Meanwhile, Chinese stocks closed at their lowest levels in seven months. The Shanghai Composite Index dropped 0.81%, closing at 2,765.81, while the Shenzhen Composite Index shed 1.60% to end at 1,505.18. Concerns over U.S. economic weakness, compounded by domestic challenges, have weighed heavily on Chinese markets.

Oil Prices Under Pressure Amid Demand Fears

Crude oil prices remained under pressure, with investors concerned about a potential slowdown in global demand if economic conditions continue to deteriorate. Despite reports of lower U.S. oil inventories, Brent crude prices remained subdued, reflecting broader market anxiety about the outlook for global energy demand.

Global Market Weakness Spreads to India

Indian stock markets were also affected by the global downturn, with selling pressure evident across sectors. Investors are closely watching the U.S. jobs data and its potential impact on the broader economic outlook. Similar to their global counterparts, Indian markets are likely to remain volatile as economic indicators from the U.S. weigh on investor sentiment.

Interest Rate Cut Uncertainty Drives Market Caution

The uncertainty surrounding the U.S. Federal Reserve's potential interest rate cut has created significant tension in global markets. Analysts remain divided on whether the Fed will cut rates by 25 or 50 basis points, a decision that could have wide-reaching implications for international financial markets. Investors are treading cautiously, with some calling Friday’s trading session the "calm before the storm," as the U.S. jobs report could set the tone for the next phase of market activity.