{"id":19745,"date":"2025-04-02T07:59:01","date_gmt":"2025-04-02T07:59:01","guid":{"rendered":"https:\/\/www.vtmarkets.com\/?p=19745"},"modified":"2025-04-02T07:59:01","modified_gmt":"2025-04-02T07:59:01","slug":"nikkei-225-recovers-after-hedge-fund-sell-off","status":"publish","type":"post","link":"https:\/\/www.vtmarkets.com\/en-ca\/analysis\/nikkei-225-recovers-after-hedge-fund-sell-off\/","title":{"rendered":"Nikkei 225 Recovers After Hedge Fund Sell-Off"},"content":{"rendered":"\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"559\" src=\"https:\/\/www.vtmarkets.com\/en-ca\/wp-content\/uploads\/sites\/13\/2026\/03\/image_fx_-2025-03-28T104301.026-1024x559.png\" alt=\"\" class=\"wp-image-19746\" \/><\/figure>\n\n\n\n<p><strong>Key Points:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Nikkei 225 rebounds to 35,704 after hitting 35,087.<\/li>\n\n\n\n<li>Morgan Stanley reports hedge fund net leverage dropped to 61% across Asia.<\/li>\n<\/ul>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity is-style-dots\" \/>\n\n\n\n<p>The <strong>Nikkei 225<\/strong> closed at <strong>35,704.15<\/strong> on Tuesday, posting a modest recovery after touching an intraday low of <strong>35,087.15<\/strong>, as markets stabilised following a week of aggressive hedge fund outflows. The index had dropped more than <strong>6% since March 26<\/strong>, when <strong>U.S. President Donald Trump announced a 25% tariff on imported vehicles<\/strong>, triggering risk-off sentiment across Asia.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\"><p lang=\"en\" dir=\"ltr\">Global investors are close to getting some clarity on the Trump administration&#39;s tariff plans, but with little detail on what to expect, financial markets remain on edge <a href=\"https:\/\/t.co\/SsSYKRWaEN\">https:\/\/t.co\/SsSYKRWaEN<\/a><\/p>&mdash; Reuters (@Reuters) <a href=\"https:\/\/twitter.com\/Reuters\/status\/1907312064713863204?ref_src=twsrc%5Etfw\">April 2, 2025<\/a><\/blockquote><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<p>According to a <strong><a href=\"https:\/\/fortune.com\/2025\/03\/31\/tech-stocks-hedge-fund-selloff-trump-tariffs-goldman-sachs\/\">Morgan Stanley prime brokerage note<\/a><\/strong>, hedge funds aggressively reduced their exposure across the region in anticipation of further tariff-related volatility. The report notes a <strong><a href=\"https:\/\/www.reuters.com\/markets\/wealth\/hedge-flow-hedge-funds-rush-cut-asia-exposure-ahead-us-tariff-announcement-2025-04-02\/\">6 percentage point drop in net leverage<\/a><\/strong>, down to <strong>61%<\/strong> last week\u2014a sharp defensive pivot ahead of Trump\u2019s planned <strong>reciprocal tariffs rollout on April 2<\/strong>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\">Technical Outlook<\/h2>\n\n\n\n<p>The Nikkei 225 on the 15-minute chart shows a <strong>sharp drop from the high of 36104.15<\/strong> down to a low of 35087.15, followed by a <strong>gradual recovery phase<\/strong>. After the dip, buyers stepped in with increasing momentum\u2014evident from the MACD crossing into bullish territory and the histogram turning green. Price has since <strong>climbed back above 35700<\/strong>, though it\u2019s currently <strong>struggling to gain clear direction<\/strong>, with movement consolidating sideways.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" src=\"https:\/\/www.vtmarkets.com\/en-ca\/wp-content\/uploads\/sites\/13\/2026\/03\/1_image-1024x441.jpg\" alt=\"\" class=\"wp-image-19747\" \/><\/figure>\n\n\n\n<p class=\"has-text-align-center\"><em>Picture: Nikkei recovers <\/em><em>from<\/em><em> 1000-point dip\u2014buyers cautious, but still in the game, as seen on the <\/em><em><a href=\"https:\/\/vtmarketsapp.onelink.me\/CD7D\/240525WA\">VT Markets app<\/a><\/em><\/p>\n\n\n\n<p>The moving averages (5, 10, 30) are starting to flatten, signaling <strong>neutral momentum<\/strong>. If price sustains above 35700, a retest of the 35840\u201335900 zone could be expected. However, downside pressure remains unless 36100 is reclaimed convincingly.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\">Fund Flows and Strategy Shifts<\/h2>\n\n\n\n<p>The <strong>sell-off was widespread<\/strong>, with <strong>multi-strategy and macro hedge funds<\/strong> leading the charge. Outflows focused heavily on <strong><a href=\"https:\/\/t.co\/FrYFr6yzjC\">South Korea<\/a><\/strong>, <strong><a href=\"https:\/\/t.co\/p5tYvEgjJf\">mainland China<\/a><\/strong>, and <strong>Taiwan<\/strong>, according to Morgan Stanley. Japan also saw increased short positions, with traders reacting defensively to Tokyo\u2019s export sensitivity and the potential escalation in <strong>U.S.-Asia trade tensions<\/strong>.<\/p>\n\n\n\n<p>In addition, hedge funds exited Chinese consumer stocks and unwound Taiwan tech exposure. This coincided with <strong><a href=\"https:\/\/www.cnbc.com\/2025\/03\/31\/south-korea-ends-its-longest-short-selling-ban-in-history-after-systemic-reforms.html\">South Korea\u2019s decision to lift its long-standing short-selling ban<\/a><\/strong>, further amplifying regional jitters.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\">Cautious Forecast<\/h2>\n\n\n\n<p>While Tuesday\u2019s rebound shows resilience, gains remain fragile. A <strong>breach below 35,500<\/strong> could reopen downside towards <strong>35,000<\/strong>, especially if <strong><a href=\"https:\/\/www.aljazeera.com\/news\/2025\/4\/1\/world-markets-on-edge-as-trump-prepares-for-liberation-day-tariffs\">Trump&#8217;s tariffs on Wednesday<\/a><\/strong><strong> escalate into broader trade conflict<\/strong>. On the upside, the index would need to break and hold above <strong>35,800<\/strong> to encourage more sustained buying.<\/p>\n\n\n\n<p>Traders should expect <strong>high volatility<\/strong> through the week, with positioning light and liquidity thin ahead of the holiday period in several Asian markets. Tariff-sensitive sectors\u2014autos, semiconductors, and exporters\u2014remain most exposed.<\/p>\n\n\n\n<p><strong><a href=\"https:\/\/www.vtmarkets.com\/trade-now\/\">Create your live VT Markets account<\/a><\/strong><strong> and <\/strong><strong><a href=\"https:\/\/myaccount.vtmarkets.com\/login\">start trading<\/a><\/strong><strong> now.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Nikkei 225 steadies at 35,700 as hedge funds slash Asia exposure ahead of Trump\u2019s April 2 tariff rollout. &#8211; vtmarkets.com<\/p>\n","protected":false},"author":64,"featured_media":19746,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[31],"tags":[11,30],"class_list":["post-19745","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-analysis","tag-indices","tag-nikkei"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/19745","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/64"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=19745"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/19745\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/19746"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=19745"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=19745"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=19745"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}