On Japan's financial markets, night trading of financial products has been on the rise since Russia's invasion of Ukraine, apparently as investors try to avert the risks of price fluctuations during daytime sessions, which are susceptible to overnight changes in the situation in Ukraine.
With a seven-hour time difference between Japan and Ukraine, changes in the situation there -- a basis for trading judgments -- tend to occur when it is nighttime in Japan. In a bid to avoid the risks of any marked price declines shortly after the opening of the daytime session of the financial markets in Japan, individual investors also pay attention to nighttime trading.
For most financial products, night trading starts after a break following the end of the daytime session -- from around 9 a.m. to around 3 p.m. -- and lasts until 6 a.m. the next day. Night trading is carried out on the Osaka Exchange and the Tokyo Commodity Exchange, both under the umbrella of the Japan Exchange Group (JPX).
Usually, the volume of trading at night would account for only about 30% of the volume for an entire trading day. Ever since Feb. 24, when the Russian military began its invasion of Ukraine, nighttime trading has accounted for 40% to 50% of daily trading volume, except for a brief period. Particularly notable was the nighttime trading for March 14, which accounted for 56% of the total trading volume of the day. It was apparently because investors, worried about further deterioration in the Ukrainian situation, overheatedly placed sell orders, as Russia intensified its offensives targeting Kyiv, the capital of Ukraine.
Among securities on the rise in nighttime trading are Nikkei 225 Futures, which are traded by investors forecasting stock prices. The trading in commodity futures has also been animated lately. The nighttime trading of gold, whose price is deemed unlikely to fall even in times of contingency, accounted for 83% of the daily trading volume on March 3.
Japan's financial markets are susceptible to changes in the movements of overseas markets, including the New York Stock Exchange, whose day session ends shortly before the stock markets open in Japan. Russia's armed aggression in Ukraine has magnified such circumstances. Investors have been taking precautions against risks of price fluctuations on the market, by conducting nighttime transactions in which they can trade flexibly in line with daily changes in the Ukraine situation.
Meanwhile, there is said to be a sharp increase in the opening of new accounts with online securities firms, to trade commodities such as gold and cereals. A market official remarked, "Individuals have also become more interested in nighttime trading."
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