The Nikkei 225 is Japan's premier stock index, tracking 225 large companies on the Tokyo Stock Exchange. Like the Dow Jones, it uses price-weighted methodology.

Why It Matters

The Nikkei 225 is the most recognized benchmark for the Japanese equity market. Japan is the world's third-largest equity market by capitalization. Key sectors include automotive (Toyota, Honda), electronics (Sony, Keyence), and trading houses (Mitsubishi, Mitsui).

Yen Correlation

The Nikkei has a strong inverse correlation with the yen—a weaker yen boosts export earnings (translated back at favorable rates), lifting the index. This relationship makes BOJ policy decisions critical for the Nikkei.

Historical Context

The Nikkei peaked at 38,957 in December 1989 during Japan's asset bubble. It took over 34 years to surpass that level in 2024, marking a historic milestone.

Market Impact

Nikkei 225 movements influence Asian market sentiment and are closely tied to yen movements and BOJ policy.