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Traders long Japanese yen, but bearish on Nikkei 225 index in May


Pan-European derivatives trading venue Spectrum Markets has published its SERIX sentiment data for European retail investors for May, revealing strong positive interest towards the Japanese Yen against the Euro and US Dollar. Meanwhile retail investors’ sentiment was bearish towards the Nikkei 225.

The SERIX value indicates retail investor sentiment, with a number above 100 marking bullish sentiment, and a number below 100 indicating bearish sentiment.

For products linked to EUR/JPY the SERIX recorded a bearish level of only 81 points last month, suggesting investors expected the Yen to outperform the Euro. Similarly, USD/JPY SERIX reached a low 92 points, as retail investors digested the positive economic updates coming out of Japan.

Interestingly, the SERIX sentiment index for the Nikkei 225 index reached a bearish 89 points, suggesting that retail investors may not have as much confidence in Japanese equities as they do in its currency.

“One possible reason for this gap could be the announcement made by the Bank of Japan at the end of April stating its intention to maintain ultra-low interest rates to provide support for the export-oriented Japanese economy”, explains Michael Hall, Head of Distribution at Spectrum Markets.

“With stock prices going up due to central bank policies and the Yen remaining artificially down, this could lead to the perception that stocks are overvalued – and the Yen is undervalued, which is reflected in the SERIX sentiment we saw last month”, Hall adds.

In May 2023, 115.2 million securitised derivatives were traded on Spectrum, with 37% of trades taking place outside of traditional hours (i.e., between 17:30 and 9:00 CET).

78% of the traded derivatives were on indices 15.1% on currency pairs, 5% on commodities, 1.6% on equities and 0.3% on cryptocurrencies, with the top three traded underlying markets being DAX 40 (23.8%), S&P 500 (19.1%), and NASDAQ 100 (18.6%).

Looking at the SERIX data for the top three underlying markets, the DAX 40 remained at 98, the S&P 500 increased marginally from 97 to 98, and the NASDAQ 100 shifted from a bullish 101 to a bearish 95.

How is the SERIX index calculated?

The Spectrum European Retail Investor Index (SERIX), uses the exchange’s pan-European trading data to shed light on investor sentiment towards current development in financial markets.

The index is calculated on a monthly basis by analysing retail investor trades placed and subtracting the proportion of bearish trades from the proportion of bullish trades, to give a single figure (rebased at 100) that indicates the strength and direction of sentiment:

SERIX = (% bullish trades – % bearish trades) + 100

Trades where long instruments are bought and trades where short instruments are sold are both considered bullish trades, while trades where long instruments are sold and trades where short instruments are bought are considered bearish trades. Trades that are matched by retail clients are disregarded.

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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