It's Buffett who "ignites" the Japanese stock market!

Warren Buffett's "abandonment" of Apple shook the global market, and with the Federal Reserve delaying rate cuts and numerous retail investors panicking and exiting, the resulting "butterfly effect" directly triggered a financial hurricane in Japan across the ocean.

Global stock markets crashed this Monday, with the Japanese stock market leading the plunge, triggering multiple circuit breakers. The Nikkei 225 index and the TOPIX index both fell by 12%, with the latter even marking the largest single-day drop since 1987, just a step away from entering a technical bear market.

This sharp decline was further exacerbated by massive forced selling by retail investors. Some analysts believe that the market perceives such massive selling as retail investors being forced to sell stocks purchased on margin.

And all this panic seems to be closely related to Buffett.

Buffett's "hint" seems to be understood by Japanese stock investors

Buffett first disclosed his Japanese stock holdings in August 2020. Since then, the stock prices of the five major trading companies have nearly quadrupled (calculated in Japanese yen), igniting the Japanese stock market single-handedly.

But why did the abandonment of Apple trigger a meltdown in the Japanese stock market? Although seemingly unrelated, these two events are intertwined with many recent details:

1. Influenced by weak economic data, the market expects the proportion of a strong U.S. economy in the next 12 months to drop to a seven-month low.

2. Amid intense market speculation on whether the U.S. economy is slowing down, the U.S. non-farm payroll data dealt a heavy blow to the market, with the unemployment rate triggering the "Sam Rule" seen as a significant sign of the U.S. economy entering a recession.

3. The negative impact of weak employment data was further amplified by the Federal Reserve delaying rate cuts, coupled with recent rate hikes by the Bank of Japan, causing market panic.

At this moment, Buffett "halved" his top holding Apple, with cash reserves possibly nearing a historical high of $200 billion, sending another signal to the already anxious market: there will be cheaper entry opportunities in the future, not now.

According to media reports, senior analyst Jesper Koll suggested that Buffett's actions seem to imply: In the global financial markets, everything starts from the United States and ends in the United States. With the sudden increase in the risk of a U.S. economic recession, the cycle of the U.S. dollar appreciating has ended.In addition, Japan is heavily reliant on the United States in terms of economy and finance, and its proud overseas market cannot exclude the United States.

Therefore, what the Japanese market needs to do now is not to confront the cycle. From the performance of the Japanese stock market today, it seems that investors have already gotten this message.

The heavy blow to the Japanese stock market may just be the beginning. Whether it will escalate or stop here, the key question is what will happen next in the United States