The Nikkei Stock Average, known as the Nikkei 225 index, is a major Japanese stock index used as a benchmark in various financial instruments. The index is composed of the top 225 Japanese companies traded on the Tokyo Stock Exchange, including Sony, Toyota, Mitsubishi and Asahi Group.
Like the Dow Jones index, the Nikkei 225 is a price-weighted index where larger companies influence the value of the index more than smaller companies.
As many of these companies are export-based, the index offers a trader an opportunity to gain simultaneous exposure to both Japan’s economy, which is the world’s fourth largest economy, and global markets.
The Contracts
For persons interested in gaining exposure to this index through a futures contract, CME Group has four options:
- Nikkei (USD) Futures
- Nikkei (JPY) Futures
- Micro Nikkei (USD) Futures
- Micro Nikkei (JPY) Futures
Both Nikkei (USD) futures and Nikkei (JPY) futures offer liquidity around the clock, and Micro Nikkei futures will bring the same benefit of these standard size Nikkei futures at 1/10th the size, $0.50 for the Micro (USD) contract and 50 yen for the Micro (JPY) contract.
The minimum fluctuation on both the USD and JPY Nikkei and Micro Nikkei contracts is 5.00 index points.
All four contracts are traded electronically, six days a week, 23 hours per day, with a daily 60-minute break at 4 p.m. Central Time. Market participants taking a stake in any of the futures contracts in the Nikkei 225 index should keep a close eye on all global economic developments in the U.S. and Japan. There has been a visible correlation between the USDJPY exchange rate and the Japanese equity market in recent decades. When the market is in a “risk on” mode, both the global equity markets and USDJPY tend to rally together. Conversely, when the market toggles over to a “risk off” mode, both global equity market and USDJPY tend to fall together as well.
