Listen to the article here:
Key Points:
The Nikkei 225 closed at 39,489.15, marking a general upward movement as it approaches a key resistance level.
From the chart below, we’re seeing the moving averages trending upwards, with price trading above each of these levels. This alignment often reflects bullish sentiment, suggesting that buyers are maintaining control.
Picture: Nikkei 225 pushes upward, nearing key resistance at 39,500, with bullish indicators suggesting continued momentum, as seen on the VT Markets app.
The MACD (12,26,9) also supports this, as a recent bullish crossover and green histogram bars indicate that momentum is building in favour of upward movement.
Technology stocks were at the heart of this rally, spurred on by the Nasdaq’s record-setting finish overnight, which boosted sentiment in Japanese tech. As traders cautiously buy back shares after last week’s sell-off on political concerns, the tech rally reflects a mix of optimism and hedged bets on Japan’s economic resilience amid looming uncertainties.
The rally was fuelled mainly by chip-related stocks and tech companies, which capitalised on strong global demand and followed cues from U.S. markets.
Disco Corporation, a key player in semiconductor equipment, jumped 11.21%, while Lasertec advanced by 4.38%. Meanwhile, Advantest, a major producer of chip-testing equipment, gained 3.43%, providing the biggest single boost to the Nikkei’s gains.
These rises come as traders look at stabilising supply chains and ongoing demand for chips as a key growth area, even amidst geopolitical pressures that have impacted other sectors.
This broader interest in tech stocks was reflected in SoftBank Group’s 2.62% gain, which aligned with similar tech-driven optimism worldwide.
With tech stocks leading, the Nikkei saw strong performance even with limited domestic drivers and a backdrop of global corporate earnings releases that kept traders somewhat cautious.
The market’s recent sell-off followed concerns that Japan’s ruling coalition may lose its lower house majority, a prospect that sent the Nikkei down 2.7% last week.
Although fears around Japan’s political landscape remain, traders appear willing to cautiously re-enter the market, encouraged by a weaker yen which typically benefits exporters.
See also: Yen Weakens, Japan’s Election Clouds Rate Outlook
While the market lacked strong catalysts, the recent activity has largely been a process of rebuying shares that were oversold on political news.
Traders now seem more focused on the global tech rally than on domestic risks, at least for the moment.
However, the political landscape remains a key factor, with potential outcomes for the ruling coalition likely to influence both sentiment and trading volumes as the situation unfolds.
Not all stocks saw gains. Truck maker Hino Motors dropped 13.34% following an announcement of a ¥230 billion ($1.5 billion) extraordinary loss, a figure that prompted a sell-off among traders concerned about rising costs.
Meanwhile, Chugai Pharmaceutical fell 4.9%, the largest drag on the Nikkei for the day, while Nitori Holdings and Komatsu recorded losses of 1.44% and 1.03%, respectively.
Despite Komatsu’s improved annual profit forecast, the results failed to stir enthusiasm, suggesting that traders may be holding back on some cyclical sectors in favour of tech.
The overall sentiment, however, remained positive, with 162 of the 225 Nikkei components closing in the green, while 59 fell and four remained flat.
Tech’s strong performance offset losses in other areas, and we’re seeing a tentative recovery in Japanese equities as traders gauge the balance between domestic political uncertainties and the broader strength of the tech sector.
This focus on chip stocks reflects an appetite for growth-driven sectors in a market still watchful of global political risk.
With this balance of gains in technology and cautious positioning in politically sensitive areas, we expect the Nikkei’s near-term trajectory to remain guided by global tech trends.
Traders are likely to continue tracking political developments, as the ruling coalition’s future could still impact broader market stability.
Start trading now — click here to create your live VT Markets account.
Official partners:
