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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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Nikkei starts 2014 with big drop

Article By: ,  Financial Analyst
January 6, 2014 9:15 AM

The Nikkei has got the new year off to a bad start by recording a major drop during trading today (January 6th) on the first session of 2014.

Having gained by close to 60 per cent over the course of the last 12 months, Japan's premier stock market lost ground as investors took their profits out of the index.

A recovery for the yen compared to other major global currencies also led to exporters struggling on the Nikkei today. Major exporters tend to perform better on the stock market when the yen is weak against the dollar.

"Tokyo stocks are overbought, and a break in the yen's fall, plus weaker futures are sure to result in some long-needed profit-taking after the December run-up," said Hiroichi Nishi, general manager of equities at SMBC Nikko Securities.

The yen had fallen to a five-year low against the US dollar at the end of last week, but showed signs of recovery during the first day of the new week today.

Nikkei's 2014

Investors will now be keeping a close eye on whether or not today's 2.35 per cent loss for the Nikkei is just a blip or a sign that 2014 is not going to be as successful for the index as last year.

Richard Jerram, chief economist at Bank of Singapore, told the BBC that he is expecting the Japanese government to take more steps to boost the country's economy in the coming months. Prime minister Shinzo Abe has already unveiled several measures in recent months as part of an economic plan dubbed by commentators as Abenomics.

"The yen is going to keep going down and as we saw last year, it's a fairly simple dynamic. It boosts the corporate sector, boosts profits and the stock market," said Mr Jerram, who predicted the Nikkei could rise by between 15 and 20 per cent for 2014 as a whole.

Last year saw the Nikkei comfortably outperform the other major stock indexes around the world, closing 2013 57 per cent higher than at the start of the year.

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