As the new week begins, global financial markets are feeling the sting of what many are calling another "Black Monday." Major stock indices across the globe are plunging, triggering circuit breakers and sparking a flight to safer assets. Japan’s Nikkei 225 tumbled by nearly 8%, while Chinese and Hong Kong indices experienced similar double-digit losses. European equities also extended last week’s sharp declines. US futures suggest another steep drop at the open, signaling a third consecutive session of gap-down openings—often viewed as a signal of investor capitulation.

Asia Pacific Markets

In the Asia-Pacific region, volatility hit currencies and equities alike. The Japanese yen strengthened, benefiting from its safe-haven status, even as the dollar tried to regain ground after dropping below ¥145. On the economic front, Japan’s wage growth edged higher in February, but inflation-adjusted earnings remained negative, casting doubt on any near-term interest rate hikes by the Bank of Japan.
In Australia, the local dollar plunged below $0.60 for the first time since the pandemic began. Although it has rebounded slightly, its technical position remains fragile. With limited economic data this week, attention turns to upcoming central bank commentary and labor figures.

European Markets

European currencies and equities faced heavy selling. The euro, which had surged following the US tariff news, lost momentum and slipped toward $1.0880, with support seen near $1.0850. Despite volatility, some positive data emerged, including a slight uptick in eurozone retail sales and industrial output gains in France and Spain. In contrast, German industrial production declined, adding to economic uncertainty.
The British pound also weakened significantly, closing last week at its lowest level in a month. Market sentiment has shifted strongly toward expectations of a rate cut from the Bank of England, as confidence erodes and growth concerns mount.

American Markets

In the US, the dollar had a mixed performance. While it closed last week near the lower end of its recent range, the greenback lost around 1% over the week, reaching levels not seen since last October. Market attention is now focused on inflation and monetary policy, particularly following a 95-basis-point drop in 10-year Treasury yields from their mid-January peak. This yield decline aligns closely with a reassessment of interest rate expectations. The Dollar Index is trading within a narrow band, and future movements may depend on developments in the US-China tariff dispute. A softening in upcoming inflation data could further sway monetary policy outlooks.