Nikkei Drops 2 Percent

What goes up must come down: Shares in Tokyo fell almost 2% on Monday, continuing to erase last year’s runaway gains.
The benchmark Nikkei has tumbled 10.3% so far this year. That means the index is now undergoing a correction, after posting a whopping 57% gain in 2013 — its biggest annual rise in over 40 years.

Market sentiment has become shaky as investors pull out of emerging markets now that the Fed has started to scale back its bond buying program. That has boosted the yen, as some investors look to relocate their money in traditional safe havens.

The currency has gained more than 3% against the dollar since hitting a 5-year low of 105.4 last month. That’s bad news for Japanese shares as it makes it more challenging for exporters to sell goods.
On top of that, emerging markets are facing a grab bag of political risks. Over the weekend, ongoing political protests stalled elections in Thailand.

via CNN

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza