Financial markets in the Asia-Pacific region have experienced a significant drop following a sharp decline on Wall Street, driven by concerns about slowing economic growth. One of the key reasons for this was the Bank of Japan's unexpectedly hawkish stance, which intensified negative sentiment among investors.

The Japanese stock market saw the most significant decline among Asian markets. The Nikkei 225 index fell by nearly 5%, reaching its lowest levels since early February, while the broader TOPIX index dropped by 4.2%. This decline followed the Bank of Japan's unexpected rate hike of 15 basis points and signals of potential further increases. This move marks the end of the accommodative monetary policy that had supported the Japanese market last year.

The rise in the yen, driven by demand for safe assets and changes in the central bank's policy, also put pressure on Japanese stocks, particularly on export-oriented companies. For instance, Toyota Motor Corp's shares fell by 3.1% following a disappointing second-quarter report and a slowdown in automobile demand.

Overall, the Asian market also experienced significant losses. The KOSPI index in South Korea dropped by 3.3% due to a sharp decline in shares of major chipmakers like Samsung Electronics, following weak reports from Intel and limited growth in the artificial intelligence sector.

The Hang Seng index in Hong Kong fell by 2.1%, linked to the drop in shares of major Chinese internet companies. The Australian ASX 200 index decreased by 2.4% amid substantial losses in the mining sector and concerns about slowing economic growth in China.

Nevertheless, Chinese markets experienced relatively smaller losses compared to other regions, despite trading at five-month lows. The Shanghai Shenzhen CSI 300 and Shanghai Composite indices dropped by 0.7% and 0.5%, respectively, remaining at weak levels since mid-February. Expectations for additional stimulus from Beijing remain low, exacerbating negative sentiment in Chinese markets.

Recent data on Purchasing Managers' Indices (PMI) and the labor market in the U.S. have heightened concerns about a slowdown in the world’s largest economy. This data supports the view that a potential rate cut by the Federal Reserve in September may not be sufficient to prevent a deep economic recession. Weak quarterly reports from tech giants like Intel and Amazon have also contributed to worsening market sentiment. Investors are now focused on upcoming U.S. employment data, which may provide new signals about the state of the economy.

Futures for the Indian Nifty 50 index also predict a weak opening after profit-taking following a record high above 25,000 points.