Nikkei 225 · September 25, 1998

The day a hedge fund had to be rescued

-3.39%

single-day change vs previous close

Part of a longer stretch

When the banks themselves failed

near the end of it · 1996-06-26 → 1998-10-09, -43.18% over the whole period

What happened that day?

On 25 September 1998 the Nikkei 225 fell 3.39%
Two days earlier a large US hedge fund had been rescued, with a group of banks pooling money to take it over
The fund included Nobel laureates and was known for making money safely, by mathematical model
Russia's default fell outside the model's assumptions, and the losses exceeded its capital
That a rescue was needed meant letting it fail would have shaken the financial system. The market read that part
In this stretch the index was 23.02% below its peak
The low of the stretch came two weeks later, on 9 October

Sources

Every figure on this page is recomputed from the original daily closing prices and checked against them at build time. The account of what happened is written from the sources listed above.