Japanese stock panic index surges, Goldman Sachs warns of possible major correction

Gelonghui, March 9｜The surge in oil prices has dampened optimism about Japan's economic outlook and corporate profits, pushing Japan's stock market fear index to its highest level since the COVID-19 crisis in 2020. The one-year implied volatility of the Nikkei 225 index rose above 30 points on Monday, reaching its highest level since March 2020. This index measures the magnitude of price fluctuations investors expect over the next year and has already surpassed the recent peak of around 28 points, which was reached after the US tariff shock in April 2025 and the Bank of Japan's interest rate hike in September 2024. Goldman Sachs Japan strategists, including Bruce Kirk, warned that the risk of a "sharp correction" in Japanese stocks is increasing, given the relative calm since the so-called "Liberation Day" volatility in April last year. They wrote that this high volatility may persist until the region's geopolitical situation becomes clearer.