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Japan’s Topix enters technical correction amidst Russia-Ukraine tensions

Concerns regarding the Federal Reserve’s new regulations and Russia’s stand-off with Ukraine have caused the Japanese stock market to fall. The benchmark investable index entered a technical correction. Topix includes all domestic Japanese stocks of the first TSE section. It is a fre-float adjusted market capitalization-weighted index. On January 25th, the Topix fell by 1.72% as it closed 10% below its September high. The Nikkei 225 fell by 1.66%.

Global stock markets are experiencing increased volatility while anticipating the Fed’s announcement to lift rates in March. This volatility has increased further due to the U.S’ decision to put its troops on high alert to back NATO forces incase Russian troops gather at Ukraine’s borders. Chief fund Manager at Shinkin Asset Management, Naoki Fujiwara has been quoted saying that Ukraine-related market risk ‘has become a bit more real now’. With the Omicron variant also triggering market falls, investors hope for the Fed to opt for a softer stance.

Service providing firms and electronic producers suffered the most. SoftBank Group Corp. Group.  and Tokyo Electron Ltd. were the biggest contributors to the 1.7% loss in the stock average.  Albeit, due to heavy weighting of stocks, Japan’s equities have performed better than its global counterparts. The Topix fell by a mere 4.8% in 2022, unlike the 7.5% and 6.6% drop in the S&P 500 Index and MSCI All-Country World Index respectively.

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