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Nikkei vs. Dow Jones Industrial Average (Giants of Traditional U.S. Industries) 🏭

The "Dow Jones Industrial Average (DJIA)" is a stock market index representing 30 large, publicly-owned U.S. companies. It's often what news reports refer to when they say "New York stocks..." Similar to the Nikkei Average in Japan, it acts as an economic barometer.

• Often Move Together?: Since the U.S. and Japanese economies are deeply intertwined, the Nikkei and Dow often move in similar directions during major global events.
  • For example, during the 2008 "Lehman Shock," a financial crisis originating in the U.S., the impact spread globally, causing both the Dow and Nikkei to plummet.
  • During the 2020 "Corona Shock," stock markets worldwide initially fell in unison.
• Different Movements at Times?: Absolutely!
  • During Japan's "Bubble Economy and its collapse" (late 1980s - early 1990s), the Nikkei skyrocketed and then crashed precipitously, while the Dow did not experience such extreme volatility. It was largely a phenomenon unique to Japan's frenzy and subsequent correction.
  • On "Black Monday" in 1987, the Dow Jones Industrial Average plummeted 22.6% in a single day! The Nikkei also dropped significantly (14.9%) the next day, but Japan recovered more quickly and headed into its bubble economy.

Nikkei vs. Nasdaq Composite Index (U.S. High-Tech & Emerging Companies) 🚀

The "Nasdaq Composite Index" represents all stocks listed on the Nasdaq stock market, which is characterized by a high concentration of technology and internet-related companies. It includes world-famous IT giants like Apple, Microsoft, Google (Alphabet), and Amazon.

• Star of the IT Bubble!: During the "IT Bubble" of the late 1990s to early 2000s, Nasdaq was truly the leading force in global stock markets. Fueled by internet hype, Nasdaq soared, and IT-related stocks within the Nikkei followed suit. When the bubble burst, Nasdaq fell sharply first, impacting Japan as well.
• Strength After Corona Shock: During the 2020 "Corona Shock," while the overall economy took a hit, Nasdaq recovered and rose strongly, partly because giant IT companies like GAFAM actually benefited from increased "stay-at-home demand." The Nikkei also recovered, but Nasdaq's momentum was particularly impressive.
• Recent AI Boom: Since 2023, high expectations for AI (Artificial Intelligence) technology have often centered around semiconductor and software companies listed on Nasdaq. Such new technological waves frequently emanate from Nasdaq to the rest of the world.

Nikkei vs. USD/JPY Exchange Rate (A Seesaw of Currency Values?) 💴💲

The "USD/JPY exchange rate" indicates the ratio for exchanging U.S. dollars and Japanese yen, expressed as "1 dollar = 100 yen," for example. When this number gets smaller (e.g., 1 dollar = 90 yen), it's called "strong yen, weak dollar" (endaka), and when it gets larger (e.g., 1 dollar = 110 yen), it's "weak yen, strong dollar" (en'yasu).

Movements in this exchange rate can significantly impact the Nikkei Stock Average, especially since many Japanese companies are exporters.

• Weak Yen Good for Stocks? Strong Yen Bad?: Generally, a weaker yen tends to boost the profits of Japanese export companies (like auto and electronics manufacturers) because the foreign currency earnings translate into more yen. This often leads to higher stock prices for these companies and can lift the entire Nikkei. Conversely, a stronger yen is often disadvantageous for exporters.
• Nightmare After the Plaza Accord: After the 1985 "Plaza Accord," the yen appreciated dramatically and rapidly, severely hitting Japanese exporters and leading to the "Strong Yen Recession" and falling stock prices. However, the subsequent monetary easing created a surplus of money, which then fueled the bubble economy.
• Honeymoon During Abenomics: Under "Abenomics" from late 2012, bold monetary easing led to a rapid depreciation of the yen, which was a major factor in pushing the Nikkei Stock Average significantly higher. During this period, the correlation "weak yen = high stocks" was very strong.
• Recent Weak Yen and Stocks: While the yen has weakened again since 2022, the simple "weak yen means higher stocks" narrative has become less straightforward. The negative aspect of rising import costs for raw materials, affecting daily life, has also gained attention. Nevertheless, a weaker yen often still benefits corporate earnings, so exchange rate movements remain crucial for stock prices.

Analysis Corner: Japan Alone? Or With the World? 🧐

Looking at these comparisons, we can see that the Nikkei Stock Average has many facets.

• When Japan Took Center Stage: During the Bubble Economy, Japan experienced unique Crazes and significant ups and downs, somewhat different from other countries.
• Sharing a Destiny with the World: During major global events like the Lehman Shock or the initial phase of the Corona Shock, the Nikkei often moves in tandem with global stock markets, for better or worse.
• Is it true that "When America sneezes, Japan catches a cold"?: This old saying often holds true; the U.S. economy and stock market movements frequently have a significant impact on Japan. However, Japan also moves due to its own domestic factors.

It would be even more insightful if we had an "interactive chart" where you could freely select periods and overlay various indices! Perhaps we can build such a tool someday. (Here, we've used simple diagrams to illustrate these relationships.)