Nikkei index in Japan declines by 5% in one day: long shadow of America

Nikkei index in Japan declines by 5% in one day: The long shadow of America

Noriko Watanabe and Sawako Uchida

Modern Tokyo Times

The Nikkei index in Japan fell by 5% based on mainly external factors. Despite this, if the internal fundamentals were sound then irrespective of events in America the fall would have been less dramatic. Hence, the Nikkei fell to its lowest point in twenty months.

Events in America are worrying international investors because the current Donald Trump administration is unpredictable. Therefore, issues related to the America-China trade dispute; the president of America being dismayed by the Chairman of America’s central bank; and the current government shutdown are all impacting on international bourses.

The BBC reports on events in America by stating, The Dow Jones index of 30 leading companies fell more than 650 points on Monday, and is on track for its worst December since 1931, during the Great Depression.” 

Taro Aso, the Finance Minister of Japan, uttered, “Concerns over the outlook for the trade friction between the United States and China are fueling the selling.”

Market Watch, more alarmingly says, The Nikkei 225 NIK, -5.01% fell by an unusually wide margin of 5%, hitting its lowest point since May 2017 with a close at 19,155.74. The index is now down just over 21% from highs reached in early October, which meets a widely accepted definition of a bear market. Loses were widespread, with all 33 Tokyo Stock Exchange subsectors posting losses. Fuji Electric 6504, -7.55%  dropped over 7%, SoftBank Group 9984, -7.58%   was off 7.6%, Fast Retailing 9983, -4.13%   fell over 4% and Toyota 7203, -5.25%   sank over 5%.”

Lee Jay Walker at Modern Tokyo Times reports, “Once more if Wall Street sneezes then the Nikkei often shares the same handkerchief. This shows a lack of genuine independence because such a powerful nation shouldn’t overreact to events in America.”

Trump stated via social media, The only problem our economy has is the Fed. They don’t have a feel for the market.”

The president continued, “The Fed is like a powerful golfer who can’t score because he has no touch – he can’t putt!”

Overall, it is clear that structural weaknesses persist in America and Japan respectively based on different factors. However, for Japan, the long shadow of America continues.

https://www.reuters.com/article/us-usa-treasury/trump-calls-fed-only-problem-in-u-s-economy-markets-slump-idUSKCN1ON0VC

https://www.bbc.co.uk/news/business-46679094

https://www.marketwatch.com/story/japans-nikkei-plunges-after-wall-streets-latest-slide-2018-12-24

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