The domestic stock markets saw a sharp crash on Monday amid a global sell-off due to fears of a slowdown in the United States economy and geopolitical tensions in West Asia.

The benchmark Sensex fell 2.95%, or 2,393.76 points, to open at 78,588.19. It hit a low of 78,353.91 points at 1 pm.

The broader Nifty 50 declined nearly 2%, or 414.85 points, to open at 24,302.85. It was at 23,925.3 points at 1 pm.

The majority of the companies were trading in the red in the morning.

According to reports, the plunge was due to fears of a recession in the United States, which intensified after data released on Friday showed that the country’s unemployment rate had jumped to 4.3% in July. This is close to the highest it has been in three years.

The US Bureau of Labor Statistics said that the country added 114,000 non-farm jobs in July, down from 206,000 in June.

Additionally, the fall in the Japanese Nikkei 225 index, which plunged as much as 10% on Monday, also contributed to Indian markets nosediving, VK Vijayakumar, chief investment strategist at Geojit Financial Services, was quoted as saying by Business Standard.

This came amid a rapid appreciation in the Japanese currency after the Bank of Japan raised interest rates to 0.25%. The rise in value of the Yen forced many investors to unwind the carry trade.

The carry trade is an investment strategy in which investors borrow money from a country with low interest rates, through a weaker currency, and reinvest it in another country’s assets that provide higher returns.

Another reason for Monday’s crash is the geopolitical tensions that have been stoked in West Asia after Israel attacked at least 10 targets across seven locations in Lebanon’s Beirut on July 30.

An alleged Israeli strike also killed Palestinian militant group Hamas’ top leader Ismail Haniyeh in Iran’s Tehran on July 31. After Haniyeh’s killing, Iran’s Supreme Leader Ayatollah Ali Khamenei vowed to take revenge against Israel.

US Secretary of State Antony Blinken has warned the Group of Seven countries that an attack by Iran and Hezbollah against Israel could take place on Monday, Axios quoted three unidentified officials as saying.

Apart from the US, the G7 includes Canada, France, Germany, Italy, Japan and the United Kingdom.

On Saturday, Hezbollah said it had launched dozens of Katyusha missiles at Israel.