Key points:
The Nikkei 225 Index rebounded on Tuesday, closing 1.8% higher at 38,062.92, marking its strongest level since August 1. The session saw the index rise more than 2% at one point, driven by a rally in technology shares and a softer yen.
See: Nikkei225 on the rise as seen on the VT Markets app.
We see here that the Nikkei 225 has experienced a solid upward momentum, with the index closing at 38,078.15, which marks a 0.67% increase. This positive movement aligns with the global trend of heightened risk appetite, largely driven by encouraging economic signals from the United States.
For one, the chart shows that the index has been consistently trading above its key Moving Averages (5, 10, 30), indicating strong bullish momentum. The MACD indicator supports this positive sentiment, as the MACD line is well above the signal line, and the histogram is showing increasing bullish momentum.
This rally in the Nikkei 225 is likely representative of the broader optimism in global markets, where investors are responding to signs of economic resilience in the U.S., such as robust consumer spending and stabilising inflation. These factors have fueled risk-on sentiment, driving equity markets higher, including Japan’s Nikkei.
Looking ahead, traders should monitor the resistance level near 38,288.15, the recent high on the chart. A break above this level could signal further upside potential for the index.
The Topix Index, a broader measure of the market, also saw gains, rising by 1.1% to close at 2,670.54. This reflects a widespread recovery across Japanese equities, as domestic tech stocks mirrored the gains seen by their U.S. counterparts. Wall Street’s ongoing recovery from a steep sell-off two weeks ago has positively influenced investor sentiment, reducing concerns about a potential U.S. recession.
The recent U.S. economic data has revived expectations of a soft landing for the world’s largest economy. Investors are now eagerly awaiting Federal Reserve Chair Jerome Powell’s remarks at the Jackson Hole Economic Symposium on Friday, which may provide further insights into the Fed’s future rate decisions.
Previously: Dollar steady, yen wobbles as traders assess rate cut bets and carry trades
In Japan, technology shares were among the biggest gainers. SoftBank Group, a prominent AI-focused startup investor, saw its stock rise by 3.1%.
Chip-related companies also performed well, with Tokyo Electron and Advantest rising by 1.6% and 2.1%, respectively. TDK Corp added 1.3%, further bolstering the technology sector’s contribution to the market rally.
In case you missed, read: Nikkei rises as Japanese yen stabilises, with tech shares leading gains
A pause in the yen’s recent strength provided additional support to the market. The Japanese currency hovered around 147.29 yen per dollar, offering a boost to export-related companies like Toyota Motor, which gained 1%. This easing of the yen’s rise reassured investors, though the market remains sensitive to fluctuations in foreign exchange rates.
Gains were widespread, with 204 of the Nikkei’s 225 constituents advancing, while only 20 declined. Fast Retailing, the parent company of Uniqlo and a heavyweight on the Nikkei, surged by 3.6%, providing the index with its largest single-stock lift.
Looking ahead, the Japanese market will likely remain influenced by both domestic factors, such as the yen’s movements, and global economic developments, particularly the upcoming insights from the Federal Reserve.
Start trading now — click here to create your live VT Markets account.
