Key Facts
• Last week, the Nikkei 225 index stayed above ¥40,000 for five consecutive trading days.
• On the night of August 1, U.S. employment data for May and June was significantly revised downward.
• Following the data release, Nikkei futures dropped nearly ¥1,000, falling below ¥40,000.
• Hiroaki Kawakita of Nezu Asia Capital Limited noted parallels to August 2024, when U.S. employment data caused a sharp decline in the S&P 500 and Japanese stocks.
• On August 5, 2024, Japanese stocks fell over ¥4,400, dubbed the “Reiwa Black Monday.”
• Kawakita emphasized that Japan is not currently in a monetary tightening phase, suggesting the decline may be temporary.
Summary
The Nikkei 225 futures experienced a sharp drop to ¥39,900, down ¥960, after U.S. employment data for May and June was revised downward on August 1. This marks a break from the index’s five-day streak above ¥40,000. Hiroaki Kawakita of Nezu Asia Capital Limited highlighted similarities to August 2024, when U.S. employment data triggered significant declines in global markets, including Japan. However, Kawakita noted that Japan’s current lack of monetary tightening could limit the downturn to a temporary dip.
