Tokyo stock market declines from record highs to sharp corrections
Date
8/12/2024 6:01:28 AM
(MENAFN) A few months ago, Tokyo's trading floors were bustling with excitement as journalists were invited to witness record-breaking highs on giant screens—an unprecedented event since 1989. Japan appeared to be on the verge of a remarkable comeback. However, despite the early signs of a sustainable recovery for Japanese stocks, recent developments suggest that the situation is not as promising as it initially seemed.
Last Monday, the Topix index experienced a dramatic 7 percent drop within just 20 minutes of trading, signaling a severe market correction. Concurrently, the yen continued its ascent against the dollar, adding to the market's volatility. A trading official remarked that the Tokyo market was behaving as if it were experiencing a global financial crisis, yet without an actual crisis to account for. This kind of swift and intense market movement is reminiscent of Japan’s previous periods of turbulence, highlighting the nation's reputation as a place where risk is harshly penalized by investors.
The rapid correction in Japan's market is notable and may alter perceptions of a market that once seemed to be on a recovery trajectory. Global investor sentiment has been impacted by various factors, including concerns over a potential US recession, uncertainty surrounding the Federal Reserve’s interest rate policies, and significant geopolitical tensions. Additionally, Japan’s yen has appreciated by 12 percent against the dollar in recent weeks, prompting many Japanese companies to reassess their profit expectations. On Friday, the Nikkei 225 suffered its largest single-day point loss since the October 1987 crash, surpassing the infamous Black Monday decline. The Topix index has now fallen over 20 percent from its July peak and has contracted by 5 percent year-to-date, marking a stark reversal from its earlier status as one of the world’s top-performing indexes.
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