The Nikkei rose 1.02% to 38,301.15 during Friday’s trading session, reversing losses after dipping below the 38,000 mark.
Earlier in the week, the index tested a low of 37,692.15, the weakest level since 1 November, but the subsequent rally highlights its resilience. Despite Friday’s gains, the Nikkei remains poised for a weekly decline of 1.6%.
Picture: Nikkei 225 consolidates near key resistance at 38,500, eyeing a breakout or potential pullback to 38,200, as seen on the VT Markets app.
From the chart, support levels can be identified near 38,200 and 37,700. A break below these levels could lead to a deeper retracement, while sustained buying pressure above 38,500 might push the index towards the next resistance zone around 39,000.
Wall Street’s positive close on Thursday catalysed Japanese equities. Nvidia’s 0.5% gain post-earnings lifted sentiment in the semiconductor sector, driving a 1.6% rise in the U.S. semiconductor index.
The recovery comes as Wall Street’s main indices closed higher on Thursday, with the Dow and the S&P 500 reaching one-week highs.
This lifted sentiment in Japan, where chip-related stocks played a pivotal role. However, the rebound was not confined to semiconductors. Refiners led gains across sectors, rising 3.25%, while the broader market saw support from various industry subgroups.
Of the 225 stocks on the Nikkei, 172 advanced, showcasing broad-based optimism. Traders reacted positively to Wall Street’s resilience and Nvidia’s gains, viewing the 38,000 threshold breach as an entry point for renewed bets.
The bounce reflects a recalibration of market sentiment, as the Nikkei remains a focal point for both domestic and foreign capital flows.
While refiners led the charge, other heavyweight sectors contributed to the day’s gains. All but three of the Tokyo Stock Exchange’s 33 industry sub-indexes moved higher, with only pharmaceuticals underperforming. Key pharmaceutical names like Daiichi Sankyo and Chugai Pharmaceutical fell 0.94% and 0.91%, respectively, capping broader gains.
The Nikkei’s ability to hold above the 38,000 mark and its subsequent rally highlights the index’s technical resilience in a challenging week.
Traders are watching for further cues from global equity markets and domestic economic indicators to determine whether this rebound marks the start of a sustained recovery or a temporary pause in the broader downtrend.
The index’s trajectory will likely hinge on whether market sentiment continues to be buoyed by global catalysts or weighed down by external uncertainties.
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