The Nikkei Crumbles

This past Thursday, the Nikkei plummeted over 7% - the worst day in that market since the 2011 earthquake and tsunami. The backup in Japanese government bonds (JGBs) post-Bernanke’s commentary initially triggered the Nikkei plummet. Then, the fl ash PMI for China fell below 50 for the fi rst time in 7 months driving down the Nikkei even further. In comparison, the Chinese equity markets were only down 1% the same day. The Nikkei has defi ed gravity since last fall with the expectation, and then realization, of a massive shift in monetary policy. Even with last week’s 7% correction, the index was still up 80% since early October 2012 and up nearly 40% in 2013.