The benchmark stock gauge of Japan, Nikkei 225 Stock Average has finally entered a correction as the same experienced a decline of more than 5% on today. Incidentally, Nikkei 225 Stock Average has been the best performing major equity gauge of this year. Except a couple, all the other stocks experienced decline on today. The benchmark gauge actually tumbled by 5.2% and the same is at 13,589.03 now. The sell-off took pace as Yen, the major currency of Japan strengthened towards 100 per USD. On the other hand, the volatility on the Nikkei 225 jumped up for the first time in last 5 days and the same is now at a 2-year high figure. Apart from that, the broader Topix Index declined by 3.8%, thereby ending today at 11% less value, if compared to the highest value it reached on 22nd May. Incidentally, a correction is denoted if a stock index declines by more than 10% from its recent peak.
According to the Chief Strategist of Daiwa SB Investments Ltd., Soichiro Monji, selling is basically feeding into more selling. Monji added that it is mind boggling that the Japanese market, which is considered to be the most liquid in the world, can have such huge movements within span of a day.
The historical volatility on the Topix Index remained at its highest level in the last 2 years, after all of 33 industry groups experienced decline. On 23rd May, the equity measure tumbled by 6.9%, marking its biggest single day decline since the nuclear disaster and tsunami in March, 2011. This decline erased at least 30.7 trillion Yen from the market. Incidentally, the Topix Index has still gained 32% in 2013.
Among companies, Honda Motor Co. experienced a decline of 3.4% pacing the losses among the carmakers on today. Among all of the Topix industry groups, the developers experienced the biggest fall, thereby extending the declines from an April peak to over 20%. The Nikkei newspaper recently reported that the banks are planning to increase the mortgage rates.
Mitsubishi UFJ Financial Group experienced a decline of 3.1% as well after the Finance Minister of Japan stated that an increase in the bond yields will probably hurt the lenders. After announcing that it will book a charge from the closing plants, Kobe Steel shares declined by 8.5%.