Japanese stocks continued to slump on Monday as traders bet on the Bank of Japan to continue raising interest rates

Japanese stocks plunged for a third day on Monday as traders expected further interest rate hikes in Japan, while concerns about a slowing U.S. economy and a stronger yen weighed on investor sentiment. The Nikkei 225 index fell more than 7% at one point, and the Topix index triggered a circuit breaker downward, sending both of Japan's major benchmarks into a bear market. Traders are now rapidly shifting their expectations that the Federal Reserve will be able to push the U.S. economy to a soft landing. Data released on Friday showed that the U.S. unemployment rate unexpectedly climbed to 4.3%, higher than the Fed's year-end forecast, triggering the SAM recession indicator. "With the unemployment rate higher than expected and core personal consumption expenditure inflation currently below the Fed's year-end forecast, we believe that the balance of risks favors the Fed to take more aggressive action," said Bross, a senior U.S. economist at UBS Group Wealth Management. (Jinshi)