The Nikkei (JP225) futures contract has enjoyed a strong bullish run, pushing the index to fresh all-time highs above the 43,000 mark for the first time in history and continuing to climb in recent sessions.
- Earlier gains were partially capped by mixed sentiment towards Japanese blue chips and automakers. However, today investors are once again optimistic about U.S.–Japan trade relations, supported by a favorable macroeconomic backdrop and solid corporate earnings from Japanese companies.
- Potential U.S. interest rate cuts could also provide a positive boost for Japanese businesses. Leading the rally are technology giant SoftBank, Sony Group, and semiconductor players Advantest and Renesas Electronics. Shares of premium tire maker Yokohama Rubber and footwear company Asics also surged following strong earnings.
- One ongoing risk for exporters is the potential appreciation of the yen, which appears increasingly likely should the U.S. embark on a series of rate cuts. However, if demand for Japanese goods holds or increases, strong order volumes could offset currency headwinds.
JP225 Chart (D1)
Today, sentiment is stabilizing and profit-taking is emerging, with the index down over 1% and retreating to its record 2024 levels. Volatility in JP225 may rise ahead of key U.S. macroeconomic releases this week (PPI, retail sales). The Nikkei’s RSI recently climbed above 70 (overbought territory) before easing to just under 65 today. On July 24, the RSI was also above 70, followed by four consecutive sessions of decline. Of course, such historical patterns are not a guarantee of future outcomes.
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JP225 Chart (H1)
Source: xStation5
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