As you know, the Japanese are cautious people. Fears associated with the spread of the coronavirus force them to reinsure themselves as much as possible. Thus, the governor of Osaka prefecture intends to demand from the federal authorities the introduction of an emergency regime. This initiative can also be supported by neighboring prefectures.
Investors are naturally worried about the COVID-19 situation in Japan. They also doubt the stability of the current government of the country, since it is not inclined to respond as promptly to the deteriorating situation with the coronavirus as the local authorities. In addition, many Japanese companies are export-oriented. Therefore, the instability of the global economy caused by the spread of the virus, especially the US economy, also does not contribute to a positive mood of investors.
As such, negative fundamentals have driven the Nikkei 225 down sharply this week.
On Monday, April 19, the market began to decline amid declines in all major US stock market indices (S&P, Dow Jones Industrial, NASDAQ). Tech stocks fell sharply on the back of rising long-term interest rates.
On Tuesday, there was a real collapse of the Japanese stock market. The vast majority of Nikkei 225 companies have experienced significant declines in their share prices. The biggest drop in quotes was from companies such as the Marui Group Co. (-5.5%), Hitachi Construction Machinery Co. (-4.7%), Dentsu Group Inc. (-4.5%), Mazda Motor Corp. (-4.1%), Hino Motors Ltd. (-4.1%), Takashimaya (-4.09%). Consequently, the Nikkei 225 dropped more than 500 points, the largest drop in a month. Typically, the Nikkei 225-linked Topix Index dropped 1.55%, not seen so much in the past four months. Notably, June Nikkei 225 futures fell 550 points on the Osaka Securities Exchange.
At the moment, the downtrend in the Nikkei 225 index continues. By the way, the corresponding futures also continues to decline, and strongly. Against the background of the difficult situation regarding the coronavirus, this suggests that the index value may pass the 28440 mark – the minimum of a month ago – and continue to fall. It is also possible that the strengthening of the Japanese yen may correlate with this.