The Yen’s Impact on the Stock Market

Here’s a look at the yen’s impact on the stock market. More correctly, I should say this is a look at how the yen is correlated with the U.S. stock market.

I looked at all the daily market activity from 1989 through 2010 and then I annualized what the stock market did on days when the yen rose against the dollar and on days when it fell against the dollar. The results are below.

As you might expect, the movement of the currencies has the least impact on domestic-oriented sectors like staples and healthcare, but it has a big impact on areas like tech and finance.

Sector Yen Rises Yen Falls
S&P 500 -19.44% 41.61%
Energy -10.46% 34.62%
Discretionary -22.06% 47.56%
Staples -9.83% 30.46%
Financials -30.78% 60.33%
Healthcare -12.24% 33.95%
Industrials -22.19% 47.95%
Tech -20.47% 50.03%
Materials -14.72% 32.24%
Telecom -23.67% 37.02%
Utilities -14.51% 23.00%

Posted by on March 29th, 2011 at 10:17 am

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