Key points:
Japan’s Nikkei index edged down 0.5% in early trading on Tuesday, hitting 37,936.68 by 0009 GMT. This decline mirrors the losses seen on Wall Street, where technology stocks led the way downward.
The broader Topix index also experienced a 0.2% drop, reflecting the cautious mood in the market.
See: Japan’s Nikkei 225 drops, as seen on the VT Markets app.
The charts tell a more detailed story. The Nikkei 225 index experienced a slide, closing at 37,995.15, down by 0.68%. This decline was primarily driven by weakness in technology shares, which have been closely mirroring the performance of their U.S. counterparts.
On Monday, the S&P 500 also closed lower, with Nvidia—a key player in the artificial intelligence sector—dipping ahead of its upcoming quarterly report. The anticipation of Nvidia’s earnings, which are expected to show significant market-moving potential, has weighed heavily on tech stocks globally, including those in Japan.
Nikkei 225 has been trading below key Moving Averages (5, 10, 30), which are currently sloping downward, indicating continued bearish momentum. The MACD indicator further confirms this negative sentiment, with the MACD line below the signal line and the histogram showing increasing bearish momentum. The index could face further downside pressure in the near term.
Market participants should keep an eye on the support level around 37,817.15, as a break below this level could signal additional declines. On the upside, resistance near 38,686.15 may cap any short-term recoveries. The market will likely remain sensitive to movements in the U.S. tech sector, particularly as Nvidia’s earnings report approaches.
This move set the tone for the tech-heavy Nasdaq, which also saw declines.
Japanese tech giants like Tokyo Electron and Advantest, both heavily involved in the semiconductor industry and linked to Nvidia, contributed to the downward pressure on the Nikkei.
In addition to the tech-driven sell-off, movements in the foreign exchange market added to the bearish sentiment. The yen strengthened to a three-week high of 143.45 against the dollar on Monday, creating headwinds for Japan’s export-heavy economy. A stronger yen typically makes Japanese goods more expensive abroad, which can negatively impact the profitability of companies reliant on foreign sales.
Looking ahead, the market may remain cautious, especially with Nvidia’s quarterly report on the horizon. Investors will likely keep a close eye on the performance of major tech stocks, both in Japan and the U.S., as these movements could continue to shape sentiment across global markets.
You might be interested: Nvidia earnings to gauge the strength of AI-driven market rally
A cautious forecast suggests that if the yen maintains its strength and Wall Street’s tech sector fails to recover, the Nikkei could see further pressure. Traders may also watch for any signs of intervention from the Bank of Japan, especially if the yen’s appreciation continues.
The broader implications for global markets hinge on how these tech giants perform in the near term, as their influence on indices like the Nikkei remains strong.
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