In the Asian stock markets, Japanese indices registered high losses during the early trading session on Monday.
The Japanese markets are down 20 per cent from their recent all-time highs. The Nikkei 225 index declined more than 1600 points or 4.85 per cent to 34,247.56.
The markets of Japan faced pressure after the Bank of Japan announced a well-telegraphed rate hike, which led to an unwinding of Yen Carry trades, as the Yen appreciated.
Foreign investors are selling Japanese stocks due to concerns that the U.S. may be heading for a recession, Naka Matsuzawa, chief strategist at Nomura Securities was quoted as saying by Nikkei Asia.
"The fall is not really happening due to Japan-specific reasons," he said. "Markets are still trying to find the bottom.
"According to Nikkei Asia, Matsuzawa does not foresee a global recession and said markets will be volatile until the U.S. Federal Reserve lowers rates. Investors are pricing in a cut by September.
In Taiwan markets the Taiwan Weighted index also declined by more than 6 per cent, and the Singapore market also declined with the index Straits Times declining around 3 per cent.
Globally markets are reacting after on Friday, the Sahm Rule got triggered, as US unemployment reached 4.3 per cent. This is predicting a US recession.
The "Sahm Rule" is a recession indicator created and named after Claudia Sahm, a macroeconomist who worked at the Federal Reserve and the White House Council of Economic Advisers.
"Expect more selling in the markets, but as we saw on June 4th and in July post the Union Budget, the strong domestic liquidity could provide a safety net for the Indian markets, in a worsening global sentiment environment. What is hurting market sentiment is also the triggering of the "Sahm rule", which has a 100 per cent record for predicting a recession" said Ajay Bagga, Banking and Market Expert.