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Japan’s Nikkei

Trading Term

Japan’s Nikkei, formally known as the Nikkei 225, is the most widely followed stock market index in Japan. It tracks the performance of 225 large, publicly traded companies listed on the Tokyo Stock Exchange (TSE) and serves as a key barometer of the Japanese economy and equity market performance, much like the Dow Jones Industrial Average in the United States.

  • The Nikkei 225 is a price-weighted index, meaning that companies with higher stock prices have a greater influence on the index’s movement, regardless of their market capitalization. This is different from a market cap-weighted index like the S&P 500.
  • The index includes major Japanese corporations across a variety of sectors such as technology (e.g., Sony, SoftBank), automotive (e.g., Toyota, Honda), and consumer electronics (e.g., Panasonic).
  • It is calculated and published by Nihon Keizai Shimbun (Nikkei Inc.), a major Japanese financial newspaper.

The Nikkei 225 is viewed as a proxy for investor sentiment and economic trends in Japan and is closely monitored by global investors, economists, and policymakers. Movements in the index can influence international markets, particularly in Asia, due to Japan’s role as a leading global economy and technology exporter. The Nikkei is also used to create financial products like ETFs and futures contracts, allowing for both domestic and international exposure to Japanese equities. Its historical peaks and troughs, such as the 1989 bubble peak, are also important markers in financial history.

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