By Julie Fernandez, Senior Financial Analyst at Triangle Profits
In recent trading sessions, the Nikkei index demonstrated a notable decline, shedding 0.61% to settle at 26,821.52, largely influenced by the trembles sent through global markets by tech stocks’ performance on the Nasdaq. A deeper dive into this correlation reveals a broader narrative of economic anxieties, primarily stoked by the U.S. Federal Reserve’s aggressive stance on inflation which led to a ripple effect across global financial landscapes.
Nasdaq’s Downward Drag
The Nasdaq itself experienced a significant drop of 1.34% due to a surge in the benchmark 10-year U.S. Treasury note, a clear signal of the market’s nervousness about a possibly prolonged period of high interest rates. This downturn in the U.S. directly impacted major Japanese technology stocks, including industry giants like SoftBank Group and Sony Group, which saw their values diminish in Monday’s trade.
Sector-Specific Shifts
While technology stocks faced the brunt of the market’s anxiety, the utility sector in Japan painted a different picture. It surged by 3.27%, emerging as the top performer among the Tokyo Stock Exchange’s 33 industry sub-indexes. This uptick can be partly attributed to Japanese Prime Minister Fumio Kishida’s recent energy policy shifts, which favour more renewable and nuclear energy sources in response to geopolitical pressures, marking a potential area of growth amidst the market turmoil.
Global Indices and Their Interlinked Fates
The story extends beyond the shores of Japan and the trading floors of Nasdaq. A broader look at other major indices such as the FTSE and Dow Jones Industrial also shows significant volatility, reflecting the interconnectedness of global markets. Recent data highlighted fluctuations in these indices during a particularly tumultuous period marked by banking uncertainties in the U.S. and the Credit Suisse capital debacle.