The Nikkei Volatility Index fell 0.43 points from the previous day to 30.25, moving into the low 30s. With the Nikkei Stock Average holding firm, market caution has eased and sentiment surrounding rising volatility is showing signs of calming.
The Nikkei Volatility Index in the Tokyo market fell 0.43 points from the previous day to 30.25, as market caution eased amid the Nikkei Stock Average's firm performance. The index measures the expected movement of the Nikkei over the coming month and normally has a weak inverse correlation with stock prices. With Japan-U.S. financial events scheduled for the 16th, caution over rising volatility eased, and the Nikkei Volatility Index remained in the low 30s.
Buying led the morning session on the 16th, although the market also turned lower at times toward the afternoon session. Nikkei 225 futures temporarily returned to positive territory, while caution over external factors, including rising crude oil futures and firming U.S. long-term interest rates, remained. The index ultimately traded in a range between a high of 30.73 and a low of 29.78.
The outcome on the 15th was different, with selling leading in the Tokyo market following declines in U.S. equities. Concerns over a slowdown in AI development and higher oil prices weighed on sentiment, and Nikkei 225 futures opened lower, although they recovered at times in the afternoon. As of 14:00, the Nikkei Volatility Index was down 0.43 points from the previous day at 30.63, after trading as high as 31.17 and as low as 29.84 that day.
The Nikkei Volatility Index remaining in the low 30s suggests that investors expect the Nikkei's movement over the coming month to be approximately 30% on an annualized basis. External factors including crude oil prices, U.S. interest rates and the growth outlook for AI-related businesses could affect market conditions, although some market participants believe that selling ahead of the financial events will remain limited.