The Nikkei 225 Volatility Index, or Nikkei VI, rose sharply. Caution following the decline in U.S. markets remained strong, and the Nikkei VI rose as high as 27.83 at one point. Nikkei 225 futures also held firm at times after trading began, but expectations for an FOMC rate hike affected the market.
The Nikkei 225 Volatility Index rose sharply to 27.83, up 4.58 from the previous day, or 19.70%. It traded between a high of 30.59 and a low of 27.31.
In Tokyo, selling prevailed initially following the decline in U.S. equities, but Nikkei 225 futures subsequently held firm. The rise in the Nikkei VI indicated heightened caution in the market.
Expectations for a rate hike at the Federal Open Market Committee (FOMC) meeting in September increased, supporting the rise in the Nikkei VI. Against this backdrop, the Nikkei VI remained well above its level at the end of last week.
The Nikkei 225 Volatility Index is a measure of how the market estimates the magnitude of future stock price movements, and it generally tends to have a weak inverse correlation with the Nikkei 225 Stock Average. After a sharp rise, the index may also revert to a certain range.