Investing.com– Asian stocks fell sharply on Monday, extending last week’s losses on growing concerns about a U.S. economic slowdown. Japanese markets are entering a bear market after hitting record highs in July.

Markets tracked Wall Street lower Friday after much weaker-than-expected nonfarm payrolls data fueled concerns that the Federal Reserve will keep interest rates high too long for the economy to see a pliable landing. Other economic averages during the week and mixed gains from tech-heavy stocks also weighed on U.S. markets, sending frail signals to regional stocks.

U.S. stock index futures fell again in Asian trading on Monday.

Japan’s Nikkei and TOPIX look at bear market

The Japanese index fell 5.5% on Monday, while the overall index was down almost 7%. Both indexes are now trading more than 20% below the record highs reached in July, risking bear market action if they close at current levels.

The Japanese stock market suffered from intense profit-taking, with foreign investors massively withdrawing from the market as the Japanese yen strengthened significantly.

The trend was reinforced by hawkish signals from the Bank of Japan after the central bank raised interest rates last week and signaled the possibility of further hikes in 2024.

Average profits from a car manufacturing giant Toyota Motor (NYSE:) Corp (TYO:) set a somber tone for Japanese markets, with a slew of key earnings from the country expected this week. Sony Corp (TYO:) and PliableBank Group Corp. (TYO:) are set to report in the coming days.

China’s losses confined by positive PMI data

Chinese indices fell relatively less than those of other countries, given that these countries had already suffered massive losses over the past two months.

Both indices fell 0.3% and 0.4% respectively to remain at more than five-month lows. Hong Kong’s index fell 1%.

Private data on Monday showed China’s services sector grew slightly more than expected in July, underlining some economic resilience.

The reading helped to slightly improve sentiment towards China after frail readings for the manufacturing sector last week.

A number of key Chinese economic data releases are expected this week, including:

Asia under fire on growth concerns

Broader Asian markets fell as appetite for risk-on stocks was hit by the prospect of worsening economic conditions. Safe-haven assets such as the Japanese yen and gold saw inflows.

The Australian currency fell 2.5% as attention on Tuesday turned to the central bank, which is likely to keep interest rates on hold.

South Korea fell 5.5%, posting extended losses as tech stocks weakened. The sector was battered by a mix of profit-taking and middling gains by major U.S. tech companies.

Indian index futures pointed to a negative opening and Indian stocks will take further gains after Nifty surged to a record high above 25,000 points last week.