The JAP225 futures on Japan's main Nikkei225 stock index are trading with a more than 1.2% rally today, and the spot benchmark climbed during the Asian session to a level of 36,008 points, highest since more than 34 years (February 1990). Further stabilization of the Japanese yen at lower levels and a drop in U.S. bond yields are driving stock prices. Investors on TSE are focusing on exporters and shippers stocks, which may see higher margins and shipping rates due to increased geopolitical risks.
- It's no longer just technology company stocks that are gaining on the Japanese stock market. The Topix 'value' companies sub-index gained 1.55% against a nearly 0.7% rally in tech companies. The banking sector gained more than 2%, and an index of financial market companies gained more than 4.5%.
- The shippers index fueled the observed upward wave, gaining more than 5.3%. At the same time, it turned out to be a record high against 33 other industries. Geopolitical risks have pushed shipping rates higher, and Japanese companies are likely to benefit from this situation
- Analysts at T. Rowe Price point out that Japanese companies will begin publishing later today a list of companies that have implemented so-called capital efficiency plans, which is causing much excitement and speculation
- The Tokyo Stock Exchange's corporate governance and corporate profitability initiatives have investors from around the world turning their attention to Japanese companies, however analysts at Nomura Securities are surprised by the momentum of the rally and suggest that some form of correction could emerge later this week.
JP225 chart (D1)
If the upward scale from the previous rally is to be repeated, a further rally, towards 39,000–40,000 points, is not excluded. In a correction scenario, a level worth watching could certainly be the psychological support zone, around 35,000 points.
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