Outlook for the Nikkei average this week [18 January 2026]

 [Fundamental viewpoint]

Last week in the U.S. market, stock indices fell over the week as investors shunned uncertainty stemming from the worsening situation in Iran, the criminal investigation into Fed Chairman Powell, and issues surrounding credit card fee restrictions.

Weekly change: NY Dow: -0.29%, NASDAQ: -0.66%, S&P 500: -0.38%.

                                                                                                 

On the other hand, medium- to long-term risks include concerns about a prolonged conflict in Ukraine, tariff policies of the U.S. administration, financial instability and global economic slowdown due to rising interest rates, and the collapse of the real estate bubble and economic slowdown in China. This also raises concerns about the arrival of stagflation. Furthermore, geopolitical risks in Latin America and East Asia, the Middle East continue to require attention..

The difference in the yield spread between the Japanese and U.S. markets is 0.82 points undervalued for the Japanese market when the OECD's nominal GDP forecast for 2026 is taken into account. The reason for the undervaluation is the difference between the S&P 500's P/E ratio of 23.0 and the Nikkei 225's P/E ratio of 20.4 the difference between the U.S. and Japanese interest rates, and the difference in GDP growth rates.

In order for the U.S. and Japanese markets to be in equilibrium, the following conditions must be met.

The difference in GDP growth between Japan and the U.S. in 2026 relative to the current price of the Nikkei 225 will be 0.82 percentage points larger than the OECD forecast. (Japan is revised downward or the U.S. is revised upward). Or the current year's forecast PER for stocks in the Nikkei Stock Average becomes about 24.4 Or, the Nikkei 225 will be around 64,670 yen.

As a result, the Japanese market is undervalued by about 10,730 yen in the medium to long term.

 

From a fundamental perspective, the Japanese market could be said to be approximately 10,730yen less attractive than the US market. Last week, the weakness in the Japanese market diminished.

 

[Conditions for Nikkei average rise]

In the future, the following assumptions are necessary for the Nikkei average to rise further.

①    Rising US market

②　Increase in profit forecast for the current fiscal year above the previous year's level

③ Further depreciation of the yen due to the widening interest rate gap between Japan and the U.S.

④ Upward revision of Japan's 2026 GDP estimate (now +2.5%) by OECD

⑤ Foreign investors over-buying

 

Looking at recent movements

①    The weekly leg of the NYDow was negative last week. The daily is above the 200-day line and above the clouds on the Ichimoku Chart. The weekly leg of the NASDAQ was negative. The daily is above the 200-day line and the clouds on the Ichimoku Chart. This week, the focus will be on whether the NY Dow can keep above the 25-day line.

②    Following the earnings announcements, the projected ROE for Nikkei 225 constituents stands at +8.9%. This is unchanged from three months ago. The profit growth rate is -3.1%, an improvement of +3.5 percentage points compared to three months ago.

③    Although U.S. long-term interest rates rose, the interest rate differential between Japan and the U.S. narrowed from 2.09 to 2.05. The dollar-yen exchange rate fluctuated within the range of 157 to 159 yen. The dollar index rose +0.24% for the week.

④    The OECD's nominal GDP growth rate for Japan and the U.S. in 2026 is expected to be +2.5% for Japan and +4.3% for the U.S., so the Japanese market is 1.8 percentage points inferior in this aspect.

⑤    The first week of January saw net buying, the second week likely saw net buying, and net buying is expected this week. Last week, out of the five points, ⑤ was the bullish factor.

 

[Technical viewpoint]

From a technical perspective, the Japanese market is overvalued by 14.8 percentage points (equivalent to approximately ¥7,980 for the Nikkei 225) relative to the NASDAQ's 200-day moving average deviation rate on a medium-to-long-term basis. Meanwhile, it is overvalued by 15.4 percentage points (equivalent to approximately ¥8,310 for the Nikkei 225) relative to the NY Dow's 200-day moving average deviation rate on a medium-to-long-term basis.

 

The Japanese market is stronger than the NY Dow and NASDAQ. The VIX, an indicator of volatility in the U.S. market, rose to 15.9 on a weekly basis. The Nikkei VI rose to 30.0 on a weekly basis. The U.S. market is in an “optimistic” state, while the Japanese market is in a “fear of heights” state.

 

The Nikkei Average is above both the 9-day and 25-day moving averages. A “green light” is lit for the short-term trend.

The Nikkei Average is above the cloud in the Ichimoku Kinko Hyo chart. The overall deviation rate is +39.0%, and the deviation rate from the 200-day moving average is +25.0%. With all three factors positive, a “green light” is lit for the medium-term trend.

 

In the US market, the NY Dow is above the 9-day line and 25-day and 200-day lines. It is above the clouds of the Ichimoku chart.

The NASDAQ is below the 9-day line and above 25-day and 200-day lines. It is above the clouds the Ichimoku Chart.

It is a ‘yellow light’ in the short term and a ‘green light’ in the medium term.

 

[Outlook for this week]

In the U.S. market, key immediate concerns are expected to include the frequency of interest rate cuts by the Federal Reserve this year, the Supreme Court's ruling on the constitutionality of Trump tariffs, and the market impact of advancing protectionist policies.

 

Looking at the technical aspects, the U.S. market is in a medium-term up trend and a short-term no trend. The Japanese market is in a medium-term up trend, and the short-term is up trend.

 

Analysis of the foreign exchange market indicates that the yen has shifted towards depreciation, with the low of 139 yen reached in April 2025 marking the bottom. This week, the yen is expected to trade between the 156 and 158 yen per dollar range.

 

This week in the U.S. market, focus will be on personal income and spending (including the PCE price index) and the revised third-quarter GDP figures. Other leading indicators scheduled for release include the S&P Purchasing Managers' Index (PMI) and the University of Michigan Consumer Sentiment Survey. Earnings reports are expected from Netflix, 3M, Johnson & Johnson, Visa, Intel, Procter & Gamble, and NextEra Energy.

Globally, the Eurozone, UK, and Japan will release their PMIs. The UK will report inflation, unemployment, and retail sales figures. China will release its final annual GDP figures. The Bank of Japan will also announce its monetary policy decision.

 

Last week, the Nikkei average exceeded its projected range. The upper limit surpassed the range by 110 yen, while the lower limit exceeded it by 1,030 yen.

This week, the Nikkei average is expected to move within a projected range defined by the upper limit at the Bollinger Band +2σ (currently around 54,110 yen) and the lower limit at the Bollinger Band +1σ (currently 52,620 yen).

             

This week, the Nikkei average is likely to remain range-bound, even after its sharp rise, until the U.S. market confirms its upward trend.

Outlook for the Nikkei average this week [12 January 2026]

 [Fundamental viewpoint]

Last week in U.S. markets, the large-scale attack on Venezuela and the capture of President Maduro did not trigger risk-off sentiment. Instead, the December employment report, which showed resilience in the labor market, was well-received, leading stock indices to rise for the week.

Weekly Change: NY Dow: +2.32%, NASDAQ: +1.88%, S&P 500: +1.57%.

                                                                                                 

On the other hand, medium- to long-term risks include concerns about a prolonged conflict in Ukraine, tariff policies of the U.S. administration, financial instability and global economic slowdown due to rising interest rates, and the collapse of the real estate bubble and economic slowdown in China. This also raises concerns about the arrival of stagflation. Furthermore, geopolitical risks in Latin America and East Asia, the Middle East continue to require attention..

The difference in the yield spread between the Japanese and U.S. markets is 1.07 points undervalued for the Japanese market when the OECD's nominal GDP forecast for 2026 is taken into account. The reason for the undervaluation is the difference between the S&P 500's P/E ratio of 23.2 and the Nikkei 225's P/E ratio of 19.7 the difference between the U.S. and Japanese interest rates, and the difference in GDP growth rates.

In order for the U.S. and Japanese markets to be in equilibrium, the following conditions must be met.

The difference in GDP growth between Japan and the U.S. in 2026 relative to the current price of the Nikkei 225 will be 1.07 percentage points larger than the OECD forecast. (Japan is revised downward or the U.S. is revised upward). Or the current year's forecast PER for stocks in the Nikkei Stock Average becomes about 24.9 Or, the Nikkei 225 will be around 65,740 yen.

As a result, the Japanese market is undervalued by about 13,800 yen in the medium to long term.

 

From a fundamental perspective, the Japanese market could be said to be approximately 13,890yen less attractive than the US market. Last week, the weakness in the Japanese market diminished.

[Conditions for Nikkei average rise]

In the future, the following assumptions are necessary for the Nikkei average to rise further.

①    Rising US market

②　Increase in profit forecast for the current fiscal year above the previous year's level

③ Further depreciation of the yen due to the widening interest rate gap between Japan and the U.S.

④ Upward revision of Japan's 2026 GDP estimate (now +2.5%) by OECD

⑤ Foreign investors over-buying

 

Looking at recent movements

①    The weekly leg of the NYDow was positive last week. The daily is above the 200-day line and above the clouds on the Ichimoku Chart. The weekly leg of the NASDAQ was positive. The daily is above the 200-day line and the clouds on the Ichimoku Chart. This week, the focus will be on whether the NY Dow can keep above the 25-day line.

②    Following the earnings announcements, the projected ROE for Nikkei 225 constituents stands at +8.9%. This represents a 0.1 percentage point improvement compared to three months ago. The profit growth rate is -3.2%, marking a 3.1 percentage point improvement compared to three months ago.

③    U.S. long-term interest rates declined, and while the interest rate differential between Japan and the U.S. narrowed from 2.14 to 2.09, the dollar-yen exchange rate moved toward a weaker yen within the range of the 156-yen level to the 158-yen level. The dollar index rose +0.72% for the week.

④    The OECD's nominal GDP growth rate for Japan and the U.S. in 2026 is expected to be +2.5% for Japan and +4.3% for the U.S., so the Japanese market is 1.8 percentage points inferior in this aspect.

⑤    The fifth week of December likely saw net selling, while the first week of January likely saw net buying. This week is expected to see net buying. Last week, out of the five points, ① and ③ were bullish factors.

 

[Technical viewpoint]

From a technical perspective, the Japanese market is overvalued by 9.1 percentage points (equivalent to approximately ¥3730 for the Nikkei average) relative to the NASDAQ's 200-day moving average deviation rate on a medium-to-long-term basis. Conversely, it is overvalued by 10.7 percentage points (equivalent to approximately ¥5560 for the Nikkei average) relative to the NY Dow's 200-day moving average deviation rate over the same timeframe.

 

The Japanese market is stronger than the NY Dow and NASDAQ. The VIX, an indicator of volatility in the U.S. market, remained flat at 14.5 for the week. The Nikkei VI rose to 26.4 for the week. The U.S. market is in an “optimistic” state, while the Japanese market is in a state of “moodiness.”

 

The Nikkei Average is above both the 9-day and 25-day moving averages. A “green light” is lit for the short-term trend.

The Nikkei Average is above the cloud in the Ichimoku Kinko Hyo chart. The overall deviation rate is +29.4%, and the deviation rate from the 200-day moving average is +21.3%. With all three factors positive, a “green light” is lit for the medium-term trend.

 

In the US market, the NY Dow is above the 9-day line and 25-day and 200-day lines. It is above the clouds of the Ichimoku chart.

The NASDAQ is above the 9-day line and 25-day and 200-day lines. It is above the clouds the Ichimoku Chart.

It is a ‘green light’ in the short term and a ‘green light’ in the medium term.

 

[Outlook for this week]

In the U.S. market, key immediate concerns are expected to include the frequency of interest rate cuts by the Federal Reserve this year, the Supreme Court's ruling on the constitutionality of Trump tariffs, and the market impact of advancing protectionist policies.

 

Looking at the technical aspects, the U.S. market is in a medium-term up trend and a short-term up trend. The Japanese market is in a medium-term up trend, and the short-term is up trend.

 

Analysis of the foreign exchange market indicates that the yen has shifted towards depreciation, with the low of 139 yen reached in April 2025 marking the bottom. This week, the yen is expected to trade between the 157 and 159 yen per dollar range.

 

This week in the U.S. market, the earnings season for major banks begins. Economic indicators to be released include inflation rates, retail sales, the producer price index, and home sales. Globally, revised GDP figures for Germany and the UK, industrial production and trade statistics for the eurozone, trade statistics for China, and Japan's current account balance and machinery orders will be announced.

 

Last week, the Nikkei average exceeded its projected range. The upper limit was surpassed by 660 yen, and the lower limit was exceeded by 590 yen.

This week, the Nikkei average is expected to move within a projected range: the upper limit is the Bollinger Band +3σ (currently around 53,050 yen), and the lower limit is the Bollinger Band +1σ (currently 51,400 yen).

             

This week, the Nikkei average is likely to open at a record high with a significant gain early in the week, depending on the outcome of the House of Representatives dissolution and general election. Futures are already up 1,500 points from the previous day.

Outlook for the Nikkei average this week [4 January 2026]

 [Fundamental viewpoint]

Last week in the U.S. markets, risk-averse selling triggered by a sharp decline in silver futures and year-end position-adjustment selling prevailed, causing stock indices to fall for the week.

Weekly Change Rate: NY Dow: -0.67%, NASDAQ: -1.52%, S&P 500: -1.03%.

                                                                                                 

On the other hand, medium- to long-term risks include concerns about a prolonged conflict in Ukraine, tariff policies of the U.S. administration, financial instability and global economic slowdown due to rising interest rates, and the collapse of the real estate bubble and economic slowdown in China. This also raises concerns about the arrival of stagflation. Furthermore, geopolitical risks in East Asia and the Middle East continue to require attention..

The difference in the yield spread between the Japanese and U.S. markets is 1.23 points undervalued for the Japanese market when the OECD's nominal GDP forecast for 2026 is taken into account. The reason for the undervaluation is the difference between the S&P 500's P/E ratio of 22.9 and the Nikkei 225's P/E ratio of 19.0 the difference between the U.S. and Japanese interest rates, and the difference in GDP growth rates.

In order for the U.S. and Japanese markets to be in equilibrium, the following conditions must be met.

The difference in GDP growth between Japan and the U.S. in 2026 relative to the current price of the Nikkei 225 will be 1.23 percentage points larger than the OECD forecast. (Japan is revised downward or the U.S. is revised upward). Or the current year's forecast PER for stocks in the Nikkei Stock Average becomes about 24.8 Or, the Nikkei 225 will be around 65,760 yen.

As a result, the Japanese market is undervalued by about 15,420 yen in the medium to long term.

 

From a fundamental perspective, the Japanese market could be said to be approximately 15,420yen less attractive than the US market. The weakness in the Japanese market has intensified.

 

[Conditions for Nikkei average rise]

In the future, the following assumptions are necessary for the Nikkei average to rise further.

①    Rising US market

②　Increase in profit forecast for the current fiscal year above the previous year's level

③ Further depreciation of the yen due to the widening interest rate gap between Japan and the U.S.

④ Upward revision of Japan's 2026 GDP estimate (now +2.5%) by OECD

⑤ Foreign investors over-buying

 

Looking at recent movements

①    The weekly leg of the NYDow was negative last week. The daily is above the 200-day line and above the clouds on the Ichimoku Chart. The weekly leg of the NASDAQ was negative. The daily is above the 200-day line and the clouds on the Ichimoku Chart. This week, the focus will be on whether the NY Dow can keep above the 25-day line.

②    Following the earnings announcements, the projected ROE for Nikkei 225 constituents stands at +8.9%. This represents a 0.1 percentage point improvement compared to three months ago. The profit growth rate is -3.1%, marking a 3.5 percentage point improvement compared to three months ago.

③    U.S. long-term interest rates rose, widening the interest rate differential between Japan and the U.S. from 2.10 to 2.14. The dollar-yen pair moved within the range of 155 to 156 yen, weakening the yen. The dollar index rose +0.39% for the week.

④    The OECD's nominal GDP growth rate for Japan and the U.S. in 2026 is expected to be +2.5% for Japan and +4.3% for the U.S., so the Japanese market is 1.8 percentage points inferior in this aspect.

The fourth week of December likely saw net buying, while the fifth week likely saw net selling. Net buying is expected this week. Last week, out of five points, ① was a bearish factor.

 

[Technical viewpoint]

From a technical perspective, the Japanese market is overvalued by 7.7 percentage points (equivalent to approximately ¥3880 for the Nikkei average) relative to the NASDAQ's 200-day moving average deviation rate on a medium-to-long-term basis. Conversely, it is overvalued by 10.1 percentage points (equivalent to approximately ¥5080 for the Nikkei average) relative to the NY Dow's 200-day moving average deviation rate over the same timeframe.

 

The Japanese market is stronger than the NY Dow and NASDAQ. The VIX, an indicator of volatility in the U.S. market, fell to 14.5 on a weekly basis. The Nikkei VI fell to 23.8 on a weekly basis. The U.S. market is in an “optimistic” state, while the Japanese market is in a state of “moodiness.”

 

The Nikkei Average is above both the 9-day and 25-day moving averages. A “green light” is lit for the short-term trend.

The Nikkei Average is above the cloud in the Ichimoku Kinko Hyo chart. The overall deviation rate is +22.2%, and the deviation rate from the 200-day moving average is +18.6%. With all three factors positive, a “green light” is lit for the medium-term trend.

 

In the US market, the NY Dow is below the 9-day line and above 25-day and 200-day lines. It is above the clouds of the Ichimoku chart.

The NASDAQ is below the 9-day line and 25-day and above 200-day lines. It is above the clouds the Ichimoku Chart.

It is a ‘yellow light’ in the short term and a ‘green light’ in the medium term.

 

[Outlook for this week]

Looking at the US market from a fundamental perspective, concerns about an economic downturn remain in the short term. Other risk factors include inflation and rising interest rates due to the Russia-Ukraine war, recession due to energy shortages and deteriorating political conditions in the EU bloc, US-China trade friction, financial market turmoil caused by the bursting of China's property bubble and credit crunch, and expanding geopolitical risks in the Middle East.

 

Looking at the technical aspects, the U.S. market is in a medium-term up trend and a short-term no trend. The Japanese market is in a medium-term up trend, and the short-term is up trend.

 

Analysis of the foreign exchange market indicates that the yen has shifted towards depreciation, with the low of 139 yen reached in April 2025 marking the bottom. This week, the yen is expected to trade between the 155 and 158 yen per dollar range.

 

This week in the U.S. markets, following the Christmas and New Year holidays, economic indicators will be released and trading volume is expected to increase. Labor market surveys, including the December Employment Report, JOLTS Job Openings Survey, and ADP Employment Report, will draw the most attention. Other releases include the ISM Purchasing Managers' Index (PMI) and the University of Michigan Consumer Sentiment Survey. Globally, China's PMI and inflation indicators, the Eurozone inflation rate, Germany's unemployment rate, and key manufacturing indicators are scheduled for release.

 

Last week, the Nikkei Average moved within an expected range. The upper limit fell below 600 yen, while the lower limit rose above 600 yen.

This week, the Nikkei Average is expected to move within a range defined by the upper limit at the Bollinger Band +2σ (currently around 51,230 yen) and the lower limit at the 25-day moving average (currently 50,140 yen).

             

This week, the Nikkei average is expected to see volatile movements early in the week due to the impact of the Trump administration's sudden military action against Venezuela.

Outlook for the Nikkei average this week [21 December 2025]

 [Fundamental viewpoint]

Last week in the U.S. markets, uncertainty surrounding the near-term outlook for AI intensified before easing, resulting in mixed weekly performance for stock indices.

Weekly Change: NY Dow: -0.67%, NASDAQ: +0.48%, S&P 500: +0.10%.

                                                                                                 

On the other hand, medium- to long-term risks include concerns about a prolonged conflict in Ukraine, tariff policies of the U.S. administration, financial instability and global economic slowdown due to rising interest rates, and the collapse of the real estate bubble and economic slowdown in China. This also raises concerns about the arrival of stagflation. Furthermore, geopolitical risks in East Asia and the Middle East continue to require attention..

The difference in the yield spread between the Japanese and U.S. markets is 1.14 points undervalued for the Japanese market when the OECD's nominal GDP forecast for 2026 is taken into account. The reason for the undervaluation is the difference between the S&P 500's P/E ratio of 23.0 and the Nikkei 225's P/E ratio of 18.9 the difference between the U.S. and Japanese interest rates, and the difference in GDP growth rates.

In order for the U.S. and Japanese markets to be in equilibrium, the following conditions must be met.

The difference in GDP growth between Japan and the U.S. in 2026 relative to the current price of the Nikkei 225 will be 1.14 percentage points larger than the OECD forecast. (Japan is revised downward or the U.S. is revised upward). Or the current year's forecast PER for stocks in the Nikkei Stock Average becomes about 24.1 Or, the Nikkei 225 will be around 63,060 yen.

As a result, the Japanese market is undervalued by about 13,550 yen in the medium to long term.

 

From a fundamental perspective, the Japanese market could be said to be approximately 13,550 yen less attractive than the US market. Last week, the weakness in the Japanese market diminished.

 

[Conditions for Nikkei average rise]

In the future, the following assumptions are necessary for the Nikkei average to rise further.

①    Rising US market

②　Increase in profit forecast for the current fiscal year above the previous year's level

③ Further depreciation of the yen due to the widening interest rate gap between Japan and the U.S.

④ Upward revision of Japan's 2026 GDP estimate (now +2.5%) by OECD

⑤ Foreign investors over-buying

 

Looking at recent movements

①    The weekly leg of the NYDow was negative last week. The daily is above the 200-day line and above the clouds on the Ichimoku Chart. The weekly leg of the NASDAQ was positive. The daily is above the 200-day line and the clouds on the Ichimoku Chart. This week, the focus will be on whether the NY Dow can keep above the 25-day line.

②    Following the earnings announcements, the projected ROE for Nikkei 225 constituents stands at +8.9%. This is unchanged from three months ago. The profit growth rate is -2.9%, an improvement of +3.6 percentage points compared to three months ago.

③    U.S. long-term interest rates declined, and while the interest rate differential between Japan and the U.S. narrowed from 2.24 to 2.19, the dollar-yen pair moved toward yen weakness within the range of the 154 yen level to the 157 yen level. The dollar index fell +0.33% for the week.

④    The OECD's nominal GDP growth rate for Japan and the U.S. in 2026 is expected to be +2.5% for Japan and +4.3% for the U.S., so the Japanese market is 1.8 percentage points inferior in this aspect.

⑤    The second week of December likely saw net buying, while the third week likely saw net selling. Net buying is expected this week. Last week, out of five points, ① was a bearish factor.

 

[Technical viewpoint]

From a technical perspective, the Japanese market is overvalued by 5.3 percentage points (equivalent to approximately ¥2620 for the Nikkei average) relative to the NASDAQ's 200-day moving average deviation rate on a medium-to-long-term basis. Conversely, it is overvalued by 9.2 percentage points (equivalent to approximately ¥4550 for the Nikkei average) relative to the NY Dow's 200-day moving average deviation rate over the same timeframe.

 

The Japanese market is stronger than the NY Dow and NASDAQ. The VIX, an indicator of volatility in the U.S. market, fell to 14.9 on a weekly basis. The Nikkei VI fell to 27.3 on a weekly basis. The U.S. market is in an “optimistic” state, while the Japanese market is in a state of “moodiness.”

 

The Nikkei average is below the 9-day and 25-day moving averages. A red light is flashing for the short-term trend.

The Nikkei average is within the cloud in the Ichimoku Kinko Hyo chart. The overall deviation rate stands at +20.3%, while the deviation rate from the 200-day moving average is +17.9%. With all two factors positive, a yellow light is flashing for the medium-term trend.

 

In the US market, the NY Dow is below the 9-day line and above 25-day and 200-day lines. It is above the clouds of the Ichimoku chart.

The NASDAQ is above the 9-day line and 25-day and 200-day lines. It is above the clouds the Ichimoku Chart.

It is a ‘yellow light’ in the short term and a ‘green light’ in the medium term.

 

[Outlook for this week]

Looking at the US market from a fundamental perspective, concerns about an economic downturn remain in the short term. Other risk factors include inflation and rising interest rates due to the Russia-Ukraine war, recession due to energy shortages and deteriorating political conditions in the EU bloc, US-China trade friction, financial market turmoil caused by the bursting of China's property bubble and credit crunch, and expanding geopolitical risks in the Middle East.

 

Looking at the technical aspects, the U.S. market is in a medium-term up trend and a short-term no trend. The Japanese market is in a medium-term no trend, and the short-term is down trend.

 

Analysis of the foreign exchange market indicates that the yen has shifted towards depreciation, with the low of 139 yen reached in April 2025 marking the bottom. This week, the yen is expected to trade between the 156 and 159 yen per dollar range.

 

This week in the U.S. market, with the shortened holiday week, the following data will be released: durable goods orders, preliminary third-quarter GDP growth rate, industrial production, and the Conference Board Consumer Confidence Index. Globally, attention will focus on EU new car registrations, the Bank of Japan minutes, Japan's unemployment rate, industrial production, and retail sales.

 

Last week, the Nikkei average fell below its projected range. The upper limit was breached by 460 yen, and the lower limit was breached by 470 yen.

This week, the Nikkei average is expected to move within a projected range: the upper limit is the Bollinger Band +2σ (currently around 51,270 yen), and the lower limit is the Bollinger Band -1σ (currently around 49,090 yen).

             

This week, the Nikkei Average still carries the risk of reverting to a soft trend if uncertainty surrounding AI investments in the U.S. market cannot be fully dispelled.

Outlook for the Nikkei average this week [14 December 2025]

 [Fundamental viewpoint]

Last week in the U.S. markets, while the Fed's 0.25% policy rate cut was well-received, uncertainty surrounding AI investments weighed on investor sentiment, resulting in mixed weekly performance for stock indices.

Weekly Change: NY Dow: +1.05%, NASDAQ: -1.62%, S&P 500: -0.63%.

                                                                                                 

On the other hand, medium- to long-term risks include concerns about a prolonged conflict in Ukraine, tariff policies of the U.S. administration, financial instability and global economic slowdown due to rising interest rates, and the collapse of the real estate bubble and economic slowdown in China. This also raises concerns about the arrival of stagflation. Furthermore, geopolitical risks in East Asia and the Middle East continue to require attention..

The difference in the yield spread between the Japanese and U.S. markets is 1.37 points undervalued for the Japanese market when the OECD's nominal GDP forecast for 2026 is taken into account. The reason for the undervaluation is the difference between the S&P 500's P/E ratio of 23.1 and the Nikkei 225's P/E ratio of 19.0 the difference between the U.S. and Japanese interest rates, and the difference in GDP growth rates.

In order for the U.S. and Japanese markets to be in equilibrium, the following conditions must be met.

The difference in GDP growth between Japan and the U.S. in 2026 relative to the current price of the Nikkei 225 will be 1.37 percentage points larger than the OECD forecast. (Japan is revised downward or the U.S. is revised upward). Or the current year's forecast PER for stocks in the Nikkei Stock Average becomes about 25.7 Or, the Nikkei 225 will be around 68,810 yen.

As a result, the Japanese market is undervalued by about 17,970 yen in the medium to long term.

 

From a fundamental perspective, the Japanese market could be said to be approximately 17,970 yen less attractive than the US market. Last week, the weakness in the Japanese market diminished.

 

[Conditions for Nikkei average rise]

In the future, the following assumptions are necessary for the Nikkei average to rise further.

①    Rising US market

②　Increase in profit forecast for the current fiscal year above the previous year's level

③ Further depreciation of the yen due to the widening interest rate gap between Japan and the U.S.

④ Upward revision of Japan's 2026 GDP estimate (now +2.5%) by OECD

⑤ Foreign investors over-buying

 

Looking at recent movements

①    The weekly leg of the NYDow was positive last week. The daily is above the 200-day line and above the clouds on the Ichimoku Chart. The weekly leg of the NASDAQ was negative. The daily is above the 200-day line and within the clouds on the Ichimoku Chart. This week, the focus will be on whether the NY Dow can keep above the 25-day line.

②    Following the earnings announcements, the projected ROE for Nikkei 225 constituents stands at +8.9%. This represents a +0.1 percentage point improvement compared to three months ago. The profit growth rate is -3.2%, marking a +3.6 percentage point improvement compared to three months ago.

③    U.S. long-term interest rates rose, widening the interest rate differential between Japan and the U.S. from 2.21 to 2.24. The dollar-yen exchange rate moved toward yen depreciation within the range of 154 to 156 yen per dollar. The dollar index fell by -0.60% for the week.

④    The OECD's nominal GDP growth rate for Japan and the U.S. in 2026 is expected to be +2.5% for Japan and +4.3% for the U.S., so the Japanese market is 1.8 percentage points inferior in this aspect.

⑤    The first week of December saw net buying, the second week likely saw net buying, and net buying is expected this week. Last week, out of the five points, ① and ③ were bullish factors.

 

[Technical viewpoint]

From a technical perspective, the Japanese market is overvalued by 9.1 percentage points (equivalent to approximately ¥4630 for the Nikkei average) relative to the NASDAQ's 200-day moving average deviation rate on a medium-to-long-term basis. Conversely, it is overvalued by 12.1 percentage points (equivalent to approximately ¥6150 for the Nikkei average) relative to the NY Dow's 200-day moving average deviation rate over the same timeframe.

 

The Japanese market is stronger than the NY Dow and NASDAQ. The VIX, an indicator of volatility in the U.S. market, rose slightly to 15.7 on a weekly basis. The Nikkei VI rose slightly to 28.7 on a weekly basis. The U.S. market is in a “slightly optimistic” state, while the Japanese market is in a state of “moodiness.”

 

The Nikkei average is above the 9-day and 25-day moving averages. A green light is flashing for the short-term trend.

The Nikkei average is above the cloud in the Ichimoku Kinko Hyo chart. The overall deviation rate stands at +30.2%, while the deviation rate from the 200-day moving average is +21.9%. With all three factors positive, a green light is flashing for the medium-term trend.

 

In the US market, the NY Dow is above the 9-day line and 25-day and 200-day lines. It is above the clouds of the Ichimoku chart.

The NASDAQ is the below 9-day line and above 25-day and 200-day lines. It is within the clouds the Ichimoku Chart.

It is a ‘yellow light’ in the short term and a ‘yellow light’ in the medium term.

 

[Outlook for this week]

Looking at the US market from a fundamental perspective, concerns about an economic downturn remain in the short term. Other risk factors include inflation and rising interest rates due to the Russia-Ukraine war, recession due to energy shortages and deteriorating political conditions in the EU bloc, US-China trade friction, financial market turmoil caused by the bursting of China's property bubble and credit crunch, and expanding geopolitical risks in the Middle East.

 

Looking at the technical aspects, the U.S. market is in a medium-term no trend and a short-term no trend. The Japanese market is in a medium-term up trend, and the short-term is up trend.

 

Analysis of the foreign exchange market indicates that the yen has shifted towards depreciation, with the low of 139 yen reached in April 2025 marking the bottom. This week, the yen is expected to trade between the 154 and 157 yen per dollar range.

 

This week in the U.S. market, delayed October and November nonfarm payrolls and the November unemployment rate are scheduled for release. Also in focus are October retail sales, November inflation data, and the December S&P Global PMI. Globally, central bank actions remain a key focus. Alongside speeches by Federal Reserve officials, policy rate decisions are scheduled for the ECB, the Bank of England, and the Bank of Japan. Other notable events include inflation indicators for Canada and the UK, flash PMIs for Japan, the Eurozone, and the UK, and Germany's Ifo Business Climate Index.

 

Last week's Nikkei average moved largely within the expected range. The upper limit fell below 580 yen, while the lower limit dipped below 170 yen.

This week's projected range for the Nikkei average is expected to be between the upper limit of the Bollinger Band +1σ (currently around 50,900 yen) and the lower limit of the Bollinger Band -1σ (currently around 49,280 yen).

             

This week, the Nikkei Average is expected to remain soft unless uncertainty surrounding AI investments in the U.S. market is resolved.

Outlook for the Nikkei average this week [7 December 2025]

 [Fundamental viewpoint]

Last week in the U.S. markets, expectations persisted that the Federal Reserve would cut its policy interest rate by 0.25% in December, leading stock indices to rise for the week.

Weekly Change Rate: NY Dow: +0.50%, NASDAQ: +0.91%, S&P 500: +0.31%.

                                                                                                 

On the other hand, medium- to long-term risks include concerns about a prolonged conflict in Ukraine, tariff policies of the U.S. administration, financial instability and global economic slowdown due to rising interest rates, and the collapse of the real estate bubble and economic slowdown in China. This also raises concerns about the arrival of stagflation. Furthermore, geopolitical risks in East Asia and the Middle East continue to require attention..

The difference in the yield spread between the Japanese and U.S. markets is 1.41 points undervalued for the Japanese market when the OECD's nominal GDP forecast for 2026 is taken into account. The reason for the undervaluation is the difference between the S&P 500's P/E ratio of 23.2 and the Nikkei 225's P/E ratio of 18.8 the difference between the U.S. and Japanese interest rates, and the difference in GDP growth rates.

In order for the U.S. and Japanese markets to be in equilibrium, the following conditions must be met.

The difference in GDP growth between Japan and the U.S. in 2026 relative to the current price of the Nikkei 225 will be 1.41 percentage points larger than the OECD forecast. (Japan is revised downward or the U.S. is revised upward). Or the current year's forecast PER for stocks in the Nikkei Stock Average becomes about 25.6 Or, the Nikkei 225 will be around 68,730 yen.

As a result, the Japanese market is undervalued by about 18,240 yen in the medium to long term.

 

From a fundamental perspective, the Japanese market could be said to be approximately 18,240 yen less attractive than the US market. Last week, weakness in the Japanese market intensified.

 

[Conditions for Nikkei average rise]

In the future, the following assumptions are necessary for the Nikkei average to rise further.

①    Rising US market

②　Increase in profit forecast for the current fiscal year above the previous year's level

③ Further depreciation of the yen due to the widening interest rate gap between Japan and the U.S.

④ Upward revision of Japan's 2026 GDP estimate (now +2.5%) by OECD

⑤ Foreign investors over-buying

 

Looking at recent movements

①    The weekly leg of the NYDow was positive last week. The daily is above the 200-day line and above the clouds on the Ichimoku Chart. The weekly leg of the NASDAQ was positive. The daily is above the 200-day line and above the clouds on the Ichimoku Chart. This week, the focus will be on whether the NY Dow can keep above the 25-day line.

②    Following the announcement of financial results, the projected ROE for Nikkei 225 constituent companies stands at +8.9%. This remains unchanged from three months ago. The profit growth rate is -23.9, representing an improvement of +3.9percentage points compared to three months ago.

③    Although U.S. long-term interest rates rose, the interest rate differential between Japan and the U.S. remained unchanged at 2.21%, and the dollar-yen rate moved toward yen appreciation within the range of the 156 yen level to the 154 yen level. The dollar index fell by -0.50% for the week.

④    The OECD's nominal GDP growth rate for Japan and the U.S. in 2026 is expected to be +2.5% for Japan and +4.3% for the U.S., so the Japanese market is 1.8 percentage points inferior in this aspect.

⑤    The fourth week of November likely saw net selling, while the first week of December likely saw net buying. Net buying is expected this week. Last week, out of the five points, ① was the bullish factor.

 

[Technical viewpoint]

From a technical perspective, the Japanese market is overvalued by 6.5 percentage points (equivalent to approximately ¥3280 for the Nikkei average) relative to the NASDAQ's 200-day moving average deviation rate on a medium-to-long-term basis. Conversely, it is overvalued by 13.0 percentage points (equivalent to approximately ¥6560 for the Nikkei average) relative to the NY Dow's 200-day moving average deviation rate over the same timeframe.

 

The Japanese market is stronger than the NY Dow and NASDAQ. The VIX, an indicator of volatility in the U.S. market, fell to 15.4 on a weekly basis. The Nikkei VI rose to 28.3 on a weekly basis. The U.S. market is in a “slightly optimistic” state, while the Japanese market is in a state of “moodiness.”.

 

The Nikkei average is above the 9-day and 25-day moving averages. A green light is flashing for the short-term trend.

The Nikkei average is above the cloud in the Ichimoku Kinko Hyo chart. The overall deviation rate stands at +29.6%, while the deviation rate from the 200-day moving average is +21.9%. With all three factors positive, a green light is flashing for the medium-term trend.

 

In the US market, the NY Dow is above the 9-day line and 25-day and 200-day lines. It is above the clouds of the Ichimoku chart.

The NASDAQ is above the 9-day line and 25-day and 200-day lines. It is above the clouds above the Ichimoku Chart.

It is a ‘green light’ in the short term and a ‘green light’ in the medium term.

 

[Outlook for this week]

Looking at the US market from a fundamental perspective, concerns about an economic downturn remain in the short term. Other risk factors include inflation and rising interest rates due to the Russia-Ukraine war, recession due to energy shortages and deteriorating political conditions in the EU bloc, US-China trade friction, financial market turmoil caused by the bursting of China's property bubble and credit crunch, and expanding geopolitical risks in the Middle East.

 

Looking at the technical aspects, the U.S. market is in a medium-term up trend and a short-term up trend. The Japanese market is in a medium-term up trend, and the short-term is up trend.

 

Analysis of the foreign exchange market indicates that the yen has shifted towards depreciation, with the low of 139 yen reached in April 2025 marking the bottom. This week, the yen is expected to trade between the 153 and 155 yen per dollar range.

 

This week in the U.S. markets, attention is expected to remain focused on the upcoming FOMC meeting next week, where policy interest rates will be decided and the economic outlook updated. However, due to the government shutdown, official data from September onwards will not be reflected in that meeting. Globally, central banks in Canada, Switzerland, Australia, Brazil, and Turkey are also scheduled to make key policy interest rate decisions. In China, the November balance of payments, Consumer Price Index (CPI), and Producer Price Index (PPI) are scheduled for release. In Europe, UK trade statistics and German industrial production figures will also be published.

 

Last week's Nikkei average moved largely within the expected range. The upper limit fell below 240 yen, while the lower limit dipped below 50 yen.

This week's projected range for the Nikkei average is expected to be between the upper limit at the Bollinger Band +2σ (currently around 52,190 yen) and the lower limit at the 25-day moving average (currently around 50,230 yen).

             

This week's Nikkei Average is also likely to continue its steady trend, provided there are no changes in expectations for additional Fed rate cuts in the U.S. market.

Outlook for the Nikkei average this week [30 November 2025]

 [Fundamental viewpoint]

Last week in the U.S. markets, stock indices rose for the week on speculation that the Federal Reserve would cut its policy interest rate by 0.25% in December.

Weekly Change Rate: NY Dow: +3.18%, NASDAQ: +4.91%, S&P 500: +3.73%.

                                                                                                 

On the other hand, medium- to long-term risks include concerns about a prolonged conflict in Ukraine, tariff policies of the U.S. administration, financial instability and global economic slowdown due to rising interest rates, and the collapse of the real estate bubble and economic slowdown in China. This also raises concerns about the arrival of stagflation. Furthermore, geopolitical risks in East Asia and the Middle East continue to require attention..

The difference in the yield spread between the Japanese and U.S. markets is 1.29 points undervalued for the Japanese market when the OECD's nominal GDP forecast for 2026 is taken into account. The reason for the undervaluation is the difference between the S&P 500's P/E ratio of 22.6 and the Nikkei 225's P/E ratio of 18.8 the difference between the U.S. and Japanese interest rates, and the difference in GDP growth rates.

In order for the U.S. and Japanese markets to be in equilibrium, the following conditions must be met.

The difference in GDP growth between Japan and the U.S. in 2026 relative to the current price of the Nikkei 225 will be 1.29 percentage points larger than the OECD forecast. (Japan is revised downward or the U.S. is revised upward). Or the current year's forecast PER for stocks in the Nikkei Stock Average becomes about 24.9 Or, the Nikkei 225 will be around 66,430 yen.

As a result, the Japanese market is undervalued by about 16,180 yen in the medium to long term.

 

From a fundamental perspective, the Japanese market could be said to be approximately 16,180 yen less attractive than the US market. Last week, the weakness in the Japanese market diminished.

 

[Conditions for Nikkei average rise]

In the future, the following assumptions are necessary for the Nikkei average to rise further.

①    Rising US market

②　Increase in profit forecast for the current fiscal year above the previous year's level

③ Further depreciation of the yen due to the widening interest rate gap between Japan and the U.S.

④ Upward revision of Japan's 2026 GDP estimate (now +2.5%) by OECD

⑤ Foreign investors over-buying

 

Looking at recent movements

①    The weekly leg of the NYDow was positive last week. The daily is above the 200-day line and above the clouds on the Ichimoku Chart. The weekly leg of the NASDAQ was positive. The daily is above the 200-day line and above the clouds on the Ichimoku Chart. This week, the focus will be on whether the NY Dow can keep above the 25-day line.

②    Following the announcement of financial results, the projected ROE for Nikkei 225 constituent companies stands at +8.9%. This remains unchanged from three months ago. The profit growth rate is -23.9, representing an improvement of +3.9percentage points compared to three months ago.

③    U.S. long-term interest rates declined, narrowing the interest rate differential between Japan and the U.S. from 2.29 to 2.21. Consequently, the dollar-yen exchange rate moved toward yen appreciation within the range of the 157-yen level to the 155-yen level. The dollar index fell by -0.72% for the week.

④    The OECD's nominal GDP growth rate for Japan and the U.S. in 2026 is expected to be +2.5% for Japan and +4.3% for the U.S., so the Japanese market is 1.8 percentage points inferior in this aspect.

⑤    The third week of November likely saw net selling, while the fourth week likely saw net buying. This week is expected to see net buying. Last week, out of the five points, ① was the bullish factor.

 

[Technical viewpoint]

From a technical perspective, the Japanese market is overvalued by 7.1 percentage points (equivalent to approximately ¥3720 for the Nikkei average) relative to the NASDAQ's 200-day moving average deviation rate on a medium-to-long-term basis. Conversely, it is overvalued by 13.5 percentage points (equivalent to approximately ¥6780 for the Nikkei average) relative to the NY Dow's 200-day moving average deviation rate over the same timeframe.

 

The Japanese market is stronger than the NY Dow and NASDAQ. The VIX, an indicator of volatility in the U.S. market, fell to 16.4 on a weekly basis. The Nikkei VI fell to 27.6 on a weekly basis. The U.S. market is in a “slightly optimistic” state, while the Japanese market is in a state of “moodiness.”.

 

The Nikkei average is above the 9-day and 25-day moving averages. A green light is flashing for the short-term trend.

The Nikkei average is above the cloud in the Ichimoku Kinko Hyo chart. The overall deviation rate stands at +30.0%, while the deviation rate from the 200-day moving average is +22.1%. With all three factors positive, a green light is flashing for the medium-term trend.

 

In the US market, the NY Dow is above the 9-day line and 25-day and 200-day lines. It is above the clouds of the Ichimoku chart.

The NASDAQ is above the 9-day line and 25-day and 200-day lines. It is above the clouds above the Ichimoku Chart.

It is a ‘green light’ in the short term and a ‘green light’ in the medium term.

 

[Outlook for this week]

Looking at the US market from a fundamental perspective, concerns about an economic downturn remain in the short term. Other risk factors include inflation and rising interest rates due to the Russia-Ukraine war, recession due to energy shortages and deteriorating political conditions in the EU bloc, US-China trade friction, financial market turmoil caused by the bursting of China's property bubble and credit crunch, and expanding geopolitical risks in the Middle East.

 

Looking at the technical aspects, the U.S. market is in a medium-term up trend and a short-term up trend. The Japanese market is in a medium-term up trend, and the short-term is up trend.

 

Analysis of the foreign exchange market indicates that the yen has shifted towards depreciation, with the low of 139 yen reached in April 2025 marking the bottom. This week, the yen is expected to trade between the 154 and 156 yen per dollar range.

 

This week in the U.S. markets, investors await delayed economic indicators and new private surveys. Among these, the Personal Consumption Expenditures (PCE) Deflator, ISM Manufacturing and Non-Manufacturing Indexes, November ADP Employment Report, and the University of Michigan Consumer Sentiment Index will be closely watched. Globally, Australia and Brazil's third-quarter GDP figures and the eurozone inflation rate are scheduled for release.

 

This week's projected range for the Nikkei average is expected to move between the upper Bollinger Band +1σ (currently around ¥51,250) and the lower Bollinger Band -1σ (currently around ¥49,210).

             

This week, the Nikkei average is likely to remain firm if expectations for further Fed rate cuts persist in the U.S. market.