(Bloomberg) -- Japanese markets have seen the most extreme moves in decades this month, as the yen lurched from a 38-year low back to the highest since the start of the year, while shares were rocked in a historic rout that was the worst since the crash of October 1987.
Volatility also surged in bond trading, testing investors trying to navigate the shift away from ultra-low interest rates in Japan that helped trigger all the market turmoil.
While Wall Street was licking its wounds from a 3% drop in the S&P 500 Index on Aug. 5, Japan’s Topix gauge had slumped more than 12%, and that came after falls of 6% and 3% in preceding days.
As the month draws to a close, here is a series of charts that illustrate the drama:
The Nikkei 225 Stock Average, which has a high concentration of Japan’s big exporters in the tech and auto sectors, experienced its widest monthly trading range in 34 years, based in intraday price levels. Over a three-day period, the Nikkei and the broader Topix index tumbled 20%. That’s the most in Bloomberg-compiled data going back to 1959 for the Topix and 1970 for the Nikkei. The recovery has also been dramatic, with the pair now down around just 3% and 1.5%, respectively, this month.
Trading in Japan’s currency was similarly impressive, with a near 13% difference between the July high and the August low for the dollar-yen pair. As the yen powered back from the weakest level since Japan’s bubble-economy era, carry trades came crashing down across global markets.
In the fixed-income market, 20-day rolling volatility of Japanese 10-year bond futures climbed to levels that far exceed the average for the past decade, underscoring how exceptional the market moves have been.
Large fluctuations have also been seen in the foreign-exchange market in terms of realized volatility for the yen, which surged to a four-year high. That led investors such as Jupiter Asset Management to bet big on gains in Japan’s currency.
Foreign investors have piled in Japanese debt, with the four-week rolling sum of their purchases of the securities and 10-year note futures climbing to the highest since April 2023.
©2024 Bloomberg L.P.
