Fear of U.S. economic recession hits Asian financial markets

Asian financial markets, including Korea's, were hit hard by fears of a potential U.S. economic recession, marking on Friday as a "Black Friday." Despite the U.S. Federal Reserve signaling a likely interest rate cut in September, this positive development was quickly overshadowed by unexpectedly weak U.S. economic indicators. Concerns about a faster-than-expected deterioration in the real economy and corporate earnings, coupled with fears of bubbles in the AI boom and global tech giants, spread quickly among investors.

On Friday, Korea's KOSPI fell by 101.49 points (3.65%) to 2,676.19, the largest drop in about 52 months since March 19, 2020, when the COVID-19 pandemic first hit. The KOSDAQ also dropped 4.20% to close at 779.33. Japan's Nikkei average index plummeted by 5.81% amid recession fears and a strong yen, marking the largest fall in 36 years and 10 months since "Black Monday" on October 20, 1987, when it dropped by 3,836 yen.

The plunge in Asian stock markets was directly influenced by fears of a U.S. economic recession. On Thursday, the NASDAQ fell by 2.3%, and the Dow Jones Index dropped by 1.21%. The Philadelphia Semiconductor Index, composed of semiconductor-related stocks, particularly fell by 7.14%. The U.S. Department of Labor reported that weekly new unemployment benefit claims reached 249,000, the highest in nearly 12 months. The Manufacturing Purchasing Managers' Index (PMI) figure announced by the Institute for Supply Management (ISM) was 46.8, a 1.7-point drop and significantly below the market expectation of 48.8.