Japanese stocks struggled to find momentum in Friday’s session, with the Nikkei bouncing slightly at midday. Still, the benchmark is poised to conclude the week down approximately 1.5%, its toughest stretch since early November.
Picture: Nikkei225 hovering near support levels, momentum stabilising as seen on the VT Markets app.
The Nikkei225 shows a modest gain of around 38849.15 from an open of 38502.15, with prices moving within a relatively tight range.
With the short-term moving averages hovering near the current price level, a pause in directional momentum is expected. The MACD (12,26,9) flattens around the centre line, reflecting neutral conditions after earlier swings. Traders may watch whether the index can hold above the recent lower zone near 38222.65, as a move back above 39102.15 would indicate renewed buying interest, while drifting below current averages could open the door for cautious selling pressure.
Its lacklustre performance comes despite currency tailwinds. The yen’s renewed weakness took USD/JPY to 157.93, a level unseen since mid-July, often a positive factor for export-sensitive Japanese equities. However, the currency advantage was overshadowed by a broader cautiousness brought on by clashing global bank policies.
The Bank of Japan’s (BOJ) decision to hold steady on interest rates and Governor Kazuo Ueda’s subsequent reiteration of the need for “considerable time” to assess domestic wages and global conditions did little to lift market sentiment.
Just days earlier, the U.S. Federal Reserve’s signal of fewer rate cuts than previously expected for 2025 caught investors off guard, raising questions about how quickly monetary conditions may ease in major economies.
This hawkish tilt weighed on Wall Street and has reverberated across global markets, keeping Japanese equities on the back foot. The Nikkei’s slide over the past two sessions—approximately 0.7% drops on both Wednesday and Thursday—underscores the market’s unease as investors process the evolving policy landscape.
Japanese government bond yields have retreated, hitting one-month lows as investors pare back expectations of near-term BOJ tightening. Yet, the bond market’s signal of caution offers scant consolation to equity bulls looking for catalysts to push stocks higher.
With the Fed and BOJ now in a holding pattern until their next meetings, investors will watch incoming data closely.
Until there is clearer guidance on how aggressively central banks will navigate the path of monetary policy in 2025, markets may continue to struggle for direction.
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