Nikkei average forecast

2025年5月11日日曜日

Outlook for the Nikkei average this week [11 May 2025]

[Fundamental viewpoint]

The US market was volatile last week, with the US administration's tariff policy making a difference, but stock indices were largely unchanged on the week.

Weekly volatility NY Dow: -0.16%, NASDAQ: -0.27%, S&P 500: -0.47.

On the other hand, medium- to long-term risks include concerns about the prolonged conflict in Ukraine, energy costs, 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. In addition, 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 3.81 points undervalued for the Japanese market when the OECD's nominal GDP forecast for 2025 is taken into account. The reason for the undervaluation is the difference between the S&P 500's P/E ratio of 21.2 and the Nikkei 225's P/E ratio of 15.1 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 2025 relative to the current price of the Nikkei 225 will be 3.81 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 36.0 Or, the Nikkei 225 will be around 88,720 yen.

As a result, the Japanese market is undervalued by about 51,210 yen in the medium to long term.

Fundamentally, the Japanese market can be said to be about 51,210 yen less attractive than the US market. Weakness in the Japanese market widened somewhat last week.

[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 2025 GDP estimate (now +3.3%) 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 below the 200-day line and within the clouds on the Ichimoku Chart. The weekly leg of the NASDAQ was positive. The daily is below the 200-day line and within the clouds of the Ichimoku Chart. This week, the focus will be on whether or not the NY Dow is able to return above the 200-day line.

② As a result of the earnings announcements, the ROE forecast for the Nikkei 225 index stood at +8.9%, an improvement of 0.1 percentage points compared to three months ago. The profit growth rate was +1.6%, a deterioration of -1.0 percentage point compared to three months ago.

③ The US long-term interest rate rose and the interest rate differential between the US and Japan narrowed from 3.06 to 3.03, but the dollar moved in a weaker direction against the yen in the range of ¥142 to ¥146. The Dollar Index rose +0.39% on the week.

④ The OECD's nominal GDP growth rate for Japan and the U.S. in 2025 is expected to be +3.3% for Japan and +4.4% for the U.S., so the Japanese market is 1.1 percentage points inferior in this aspect.

⑤ The fifth week of April was overbought, the first week of May was likely overbought and this week is expected to be overbought. Of the five points, ③ and ⑤ were bullish last week.

[Technical viewpoint]

Looking at the Japanese market from a technical perspective, it is overvalued by 1.3 point in the medium to long term in terms of the difference in 200-day divergence from the NASDAQ (about 490 yen in terms of the Nikkei 225). On the other hand, the difference in 200-day divergence from the NYDow is overvalued by 1.4 points in the medium to long term (about 530 yen in terms of the Nikkei 225).

Japanese markets turned strong against the NY Dow and NASDAQ. The VIX, a measure of US market volatility, fell to a weekly low of 21.9. The Nikkei VI fell to a weekly low of 24.5. Both the US and Japanese markets are in a state of ‘doubt’.

The Nikkei 225 is above the 9-day and 25-day lines. The short-term trend has a "green light".

The Nikkei 225 is in the equilibrium cloud. The overall divergence is +7.7% and the divergence from the 200-day moving average is -1.1%. As these factors are negative, a "yellow light" has been given to the medium-term trend.

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

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

This is a ‘green 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, recessionary fears are amplified in the near-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 down trend and a short-term up trend. The Japanese market is in a medium-term no trend, and the short-term is up trend.

Analysis of the foreign exchange market shows that the yen has turned stronger since topping out at 156 yen, which was reached in January 2025. This week, the yen is expected to be between 144 and 147 yen.

In the US markets this week, market attention will continue to focus on the US trade negotiations, with inflation, retail sales and speeches from Fed officials. Producer prices, industrial production, Michigan consumer confidence and housing starts will also be released. Globally, the focus will be on the UK's Q1 GDP growth and unemployment rate, China's industrial production, retail sales and house prices, Germany's ZEW business confidence index and Japan's Q1 GDP growth.

Last week, the Nikkei 225 fell below its expected range. The upside was below ¥110 and the downside was below ¥190.

This week, the Nikkei 225 is expected to move between Bollinger Band +2σ (currently around JPY 37850) on the upside and Bollinger Band +1σ (currently around JPY 36330) on the downside.

This week, it will be interesting to see whether the Nikkei 225 will move in line with or diverge from the Bollinger Band +2σ.

2025年5月6日火曜日

Outlook for the Nikkei average this week [6 May 2025]

[Fundamental viewpoint]

In the US markets last week, stock indices rose for the week on expectations that US-China talks are progressing and that US-China trade frictions are easing, as well as generally strong economic releases.

Weekly change NY Dow: +3.00%, NASDAQ: +3.42%, S&P 500: +2.92.

The difference in the yield spread between the Japanese and U.S. markets is 3.85 points undervalued for the Japanese market when the OECD's nominal GDP forecast for 2025 is taken into account. The reason for the undervaluation is the difference between the S&P 500's P/E ratio of 21.1 and the Nikkei 225's P/E ratio of 15.1 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 2025 relative to the current price of the Nikkei 225 will be 3.85 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 36.0 Or, the Nikkei 225 will be around 87,910 yen.

As a result, the Japanese market is undervalued by about 51,080 yen in the medium to long term.

Fundamentally, the Japanese market can be said to be about 51,080 yen less attractive than the US market. Weakness in the Japanese market has been magnified.

[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 2025 GDP estimate (now +3.3%) 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 below the 200-day line and below the clouds on the Ichimoku Chart. The weekly leg of the NASDAQ was positive. The daily is below the 200-day line and below the clouds of the Ichimoku Chart. This week, the focus will be on whether or not the NY Dow is able to return above the 200-day line.

② As a result of the earnings announcements, the expected ROE of the Nikkei 225 stocks was +9.2%, the same level as three months ago. The profit growth rate was +5.2%, an improvement of +2.6 percentage points compared to three months ago.

③ Although long-term interest rates in the US rose and the interest rate differential between the two countries widened from 2.91 to 3.06, the dollar moved towards a stronger yen in the range of ¥144 to ¥143. The Dollar Index fell -0.23% on the week.

⑤ The fourth week of April was overbought, the fifth week of April was likely overbought and this week is expected to be overbought. Of the five points, ① was bullish last week.

[Technical viewpoint]

Looking at the Japanese market from a technical perspective, it is undervalued by 1.0 point in the medium to long term in terms of the difference in 200-day divergence from the NASDAQ (about 370 yen in terms of the Nikkei 225). On the other hand, the difference in 200-day divergence from the NYDow is undervalued by 0.8 points in the medium to long term (about 290 yen in terms of the Nikkei 225).

Japanese markets are weak against the NY Dow and NASDAQ. The VIX, a measure of US market volatility, fell to a weekly low of 24.4. The Nikkei VI fell to a weekly low of 27.1. Both the US and Japanese markets are in a state of ‘doubt’...

The Nikkei 225 is above the 9-day and 25-day lines. The short-term trend has a "green light".

The Nikkei 225 is below the equilibrium cloud. The overall divergence is +2.2% and the divergence from the 200-day moving average is -3.1%. As these two factors are negative, a "yellow signal" is lit for the medium-term trend.

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

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

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

[Outlook for this week]

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

This week's US markets will be focused on potential tariff negotiations between the US and China, the Fed's interest rate decision and subsequent statements from Fed officials, and a string of Q1 earnings reports. There will also be important data releases, including the ISM Services PMI and trade statistics. Globally, the UK monetary policy decision, German manufacturing orders and industrial production, and China's services PMI and new yuan-denominated loans will be in focus.

Last week, the Nikkei 225 remained within the expected range. The upper price was below ¥510 and the lower price was above ¥910.

This week, the Nikkei 225 is expected to move between the Bollinger Band +2σ + ¥800 (currently around ¥38290) on the upside and Bollinger Band +2σ - ¥800 (currently around ¥36890) on the downside.

This week will be a week to see if the Nikkei 225 can move into line with the +2σ Bollinger band or be allowed to bounce back.

2025年4月27日日曜日

Outlook for the Nikkei average this week [27 April 2025]

[Fundamental viewpoint]

In the US markets last week, stock indices rose for the week as investor sentiment improved on speculation that the Trump administration had eased its stance on China in its trade policy.

Weekly change NY Dow: +2.48%, NASDAQ: +6.73%, S&P 500: +4.59.

The difference in the yield spread between the Japanese and U.S. markets is 3.82 points undervalued for the Japanese market when the OECD's nominal GDP forecast for 2025 is taken into account. The reason for the undervaluation is the difference between the S&P 500's P/E ratio of 19.0 and the Nikkei 225's P/E ratio of 14.5 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.

As a result, the Japanese market is undervalued by about 44,370 yen in the medium to long term.

Fundamentally, the Japanese market can be said to be about 44,370 yen less attractive than the US market. Weakness in the Japanese market narrowed somewhat last week.

[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 2025 GDP estimate (now +3.3%) by OECD

⑤ Foreign investors over-buying

Looking at recent movements

② As a result of the earnings announcements, the estimated ROE of the Nikkei 225 index stood at +9.1%, an improvement of 0.1 percentage points compared to three months ago. The profit growth rate was +7.3%, an improvement of +5.2 percentage points compared to three months ago.

③ Although long-term interest rates in the US declined and the interest rate differential between the two countries narrowed from 3.05 to 2.91, the dollar moved in a weaker direction against the yen in the range of ¥139 to ¥144. The Dollar Index fell +0.18% on the week.

⑤ The third week of April was overbought, the fourth week of April was likely overbought and this week is expected to be overbought. Of the five points, ① and ③ were bullish last week.

[Technical viewpoint]

Looking at the Japanese market from a technical perspective, it is undervalued by 1.0 point in the medium to long term in terms of the difference in 200-day divergence from the NASDAQ (about 360 yen in terms of the Nikkei 225). On the other hand, the difference in 200-day divergence from the NYDow is undervalued by 1.2 points in the medium to long term (about 430 yen in terms of the Nikkei 225).

Japanese markets are weak against the NY Dow and NASDAQ. The VIX, a measure of US market volatility, fell to a weekly low of 24.8. The Nikkei VI fell to a weekly low of 28.7. Both the US and Japanese markets are in a state of ‘doubt’..

The Nikkei 225 is above the 9-day and 25-day lines. The short-term trend has a "green light".

T The Nikkei 225 is below the equilibrium cloud. The overall divergence is -8.4% and the divergence from the 200-day moving average is -6.3%. As these three factors are negative, a "red light" has been illuminated for the medium-term trend.

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

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

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

[Outlook for this week]

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

In the US markets this week, investors will be keeping a close eye on developments in the ongoing US-China trade dispute. In addition, major companies such as Apple, Microsoft, Amazon and Meta will release their quarterly results. In terms of key economic indicators, attention will focus on the preliminary GDP growth figures for the first quarter of 2025, employment data, PCE inflation data and the ISM manufacturing PMI. Globally, preliminary GDP and inflation figures for the Eurozone, monetary policy in the , and Chinese PMIs will be released.

Last week, the Nikkei 225 remained within the expected range. The upper price was below ¥830 and the lower price was above ¥850.

This week, the Nikkei 225 is expected to move between the Bollinger Band +2σ (currently around JPY 38410) on the upside and the 25-day line (currently around JPY 34930) on the downside.

This week, the Nikkei 225 will be interested in how far it can diverge above the 25-day line and the depth of the second bottom.

2025年4月20日日曜日

Outlook for the Nikkei average this week [20 April 2025]

[Fundamental viewpoint]

Stock indices fell on the US markets last week, with a spillover from the fall in NVIDIA shares, whose AI semiconductors for China were subject to US government export restrictions.

Weekly change NY Dow: -2.66%, NASDAQ: -2.62%, S&P 500: -1.50.

The difference in the yield spread between the Japanese and U.S. markets is 4.02 points undervalued for the Japanese market when the OECD's nominal GDP forecast for 2025 is taken into account. The reason for the undervaluation is the difference between the S&P 500's P/E ratio of 19.8 and the Nikkei 225's P/E ratio of 14.0 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 2025 relative to the current price of the Nikkei 225 will be 4.02 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 32.2 Or, the Nikkei 225 will be around 79,690 yen.

As a result, the Japanese market is undervalued by about 44,960 yen in the medium to long term.

Fundamentally, the Japanese market can be said to be about 44,960 yen less attractive than the US market. Weakness in the Japanese market narrowed last week.

[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 2025 GDP estimate (now +3.3%) 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 below the 200-day line and below the clouds on the Ichimoku Chart. The weekly leg of the NASDAQ was negative. The daily is below the 200-day line and below the clouds of the Ichimoku Chart. This week, the focus will be on whether or not the NY Dow is able to return above the 25-day line.

② As a result of the announcement of financial results, the expected ROE of the Nikkei 225 stocks was +9.2%, the same level as three months ago; the profit growth rate was +7.3%, an improvement of +5.3 percentage points compared to three months ago; and the ROE of the Nikkei 225 stocks was +9.2%, an improvement of +5.3 percentage points compared to three months ago.

③ US long-term interest rates fell and the interest rate differential between the US and Japan narrowed from 3.21 to 3.05, with the dollar moving in the direction of a stronger yen in the range of ¥144 to ¥141. The Dollar Index fell -0.38% on the week.

⑤ The second week of April was overbought, the third week of April was likely overbought and this week is expected to be overbought. Last week, of the five points, ① was bearish and ⑤ was bullish.

[Technical viewpoint]

Looking at the Japanese market from a technical perspective, it is undervalued by 2.4 points in the medium to long term in terms of the difference in 200-day divergence from the NASDAQ (about 830 yen in terms of the Nikkei 225). On the other hand, the difference in 200-day divergence from the NYDow is 1.6 points (approximately 560 yen in relation to the Nikkei 225) more expensive in the medium to long term.

Japanese markets are weak against the NY Dow and NASDAQ. The VIX, a measure of US market volatility, fell to a weekly low of 29.7. The Nikkei VI fell to a weekly low of 30.8. Both the US and Japanese markets are in a state of ‘fear’..

The Nikkei 225 is above the 9-day line and below the 25-day line. The short-term trend is ‘yellowing’.

The Nikkei 225 is below the Ichimoku Chart cloud. The overall divergence is -19.0% and the divergence from the 200-day moving average is -9.1%. As these three factors are negative, a "red light" has been illuminated for the medium-term trend.

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

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

This is a ‘red light’ in the short term and a ‘red light’ in the medium term.

[Outlook for this week]

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

In the US markets, volatility is likely to continue to rise across all asset classes as the future of tariff policy remains uncertain. Durable goods orders and existing home sales will also be in focus on economic indicators.

Investors will also be closely watching earnings reports from Alphabet, Tesla, Boeing, Intel, IBM, Merck and P&G. Globally, preliminary PMI figures from the Eurozone and Japan will reveal the initial impact of the tariff threat.

Last week, the Nikkei 225 remained within the expected range. The upper price was below ¥720 and the lower price was above ¥1990.

This week, the Nikkei 225 is expected to move between the Bollinger Band +1σ (currently around JPY 37490) on the upside and the Bollinger Band -1σ (currently around JPY 33470) on the downside.

The first barrier for the Nikkei 225 this week will be whether it can cross the 25-day line. If it can cross it, there will be room to rise to 36 000 yen.

2025年4月13日日曜日

Outlook for the Nikkei average this week [13 April 2025]

[Fundamental viewpoint]

In the US markets last week, the Trump administration's announcement that reciprocal tariffs would be suspended for 90 days in countries and regions other than China led to a sell-off and stock indices rose for the week.

Weekly change NY Dow: +4.95%, NASDAQ: +7.29%, S&P 500: +5.70.

The difference in the yield spread between the Japanese and U.S. markets is 4.52 points undervalued for the Japanese market when the OECD's nominal GDP forecast for 2025 is taken into account. The reason for the undervaluation is the difference between the S&P 500's P/E ratio of 20.2 and the Nikkei 225's P/E ratio of 13.6 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 2025 relative to the current price of the Nikkei 225 will be 4.53 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 35.1 Or, the Nikkei 225 will be around 86,780 yen.

As a result, the Japanese market is undervalued by about 53,190 yen in the medium to long term.

Fundamentally, the Japanese market can be said to be about 53,190 less attractive than the US market. Weakness in the Japanese market was magnified last week.

[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 2025 GDP estimate (now +3.3%) 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 below the 200-day line and below the clouds on the Ichimoku Chart. The weekly leg of the NASDAQ was posittive. The daily is below the 200-day line and below the clouds of the Ichimoku Chart. This week, the focus will be on whether or not the NY Dow is able to return above the 25-day line.

② As a result of the earnings announcements, the forecasted ROE of the Nikkei 225 index stood at +9.2%, an improvement of 0.1 percentage points compared to three months ago. The profit growth rate was +7.3%, an improvement of +4.8 percentage points compared to three months ago.

③ Although long-term interest rates in the US rose and the interest rate differential between the two countries widened from 2.83 to 3.21, the dollar moved towards a stronger yen in the range of ¥148 to ¥142. The Dollar Index fell +3.02% on the week.

⑤ The first week of April was overbought, the second week of April was likely overbought and this week is expected to be overbought. Last week, of the five points, ① was bullish and ③ was bearish.

[Technical viewpoint]

Looking at the Japanese market from a technical perspective, it is undervalued by 3.0 points in the medium to long term in terms of the difference in 200-day divergence from the NASDAQ (about 1010 yen when calculated for the Nikkei 225). On the other hand, the difference in 200-day divergence from the NYDow is undervalued by 7.4 points in the medium to long term (about 2,490 yen in terms of the Nikkei 225).

Japanese markets are weak against the NY Dow and NASDAQ. The VIX, a measure of US market volatility, fell to a weekly low of 37.6. The Nikkei VI rose to 44.4 for the week. Both the US and Japanese markets are in a state of ‘extreme fear’.

The Nikkei 225 is below the 9-day and 25-day lines. The short-term trend has a ‘red light’.

The Nikkei 225 is below the equilibrium cloud. The overall divergence is -30.6% and the divergence from the 200-day moving average is -12.3%. As these three factors are negative, a ‘red light’ has been illuminated for the medium-term trend.

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

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

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

[Outlook for this week]

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

The US market is likely to be very volatile as investors continue to monitor tariff developments. At the same time, the US earnings season is in full swing. In terms of economic indicators, retail sales, industrial production and housing indicators will be released. Globally, China's first quarter GDP growth, Germany's ZEW business sentiment index, UK inflation and labour market data and Japan's consumer price index will be released. The European Central Bank will also announce its policy decisions.

Last week, the Nikkei 225 swung above and below its expected range. The upside was above ¥400 and the downside was below ¥1,290.

This week, the Nikkei 225 is expected to move between the 25-day line (currently around 36 000 yen) on the upside and Bollinger Band -2σ (currently around 32080 yen) on the downside.

This week, investors in the US and Japanese markets will be looking for the presence and depth of a second bottom based on the persistence and momentum of the stock index rebound.

2025年4月6日日曜日

Outlook for the Nikkei average this week [6 April 2025]

[Fundamental viewpoint]

In the US markets last week, the announcement of the US administration's tariff policy led to a sharp weekly decline in stock indices as selling swelled on fears that the economy and corporate earnings could deteriorate as a result of tariff reprisals.

Weekly volatility NY Dow: -7.86%, NASDAQ: -10.02%, S&P 500: -9.08.

The difference in the yield spread between the Japanese and U.S. markets is 4.00 points undervalued for the Japanese market when the OECD's nominal GDP forecast for 2025 is taken into account. The reason for the undervaluation is the difference between the S&P 500's P/E ratio of 20.0 and the Nikkei 225's P/E ratio of 13.8 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 2025 relative to the current price of the Nikkei 225 will be 4.00 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 30.5 Or, the Nikkei 225 will be around 75,010 yen.

As a result, the Japanese market is undervalued by about 41,230 yen in the medium to long term.

Fundamentally, the Japanese market can be said to be about 41,230 less attractive than the US market. Weakness in the Japanese market was magnified last week.

[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 2025 GDP estimate (now +3.3%) by OECD

⑤ Foreign investors over-buying

Looking at recent movements

② As a result of the earnings announcements, the forecasted ROE of the Nikkei 225 companies was +9.1%, the same level as three months ago. The profit growth rate was +6.8%, an improvement of +4.6 percentage points compared to three months ago.

③ Although long-term interest rates in the US fell and the interest rate differential between the two countries widened from 2.72 to 2.83, the dollar moved in the direction of a stronger yen in the range of ¥150 to ¥144. The Dollar Index rose +0.93% on the week.

⑤ The fourth week of March was oversold, the first week of April was likely oversold and this week is expected to be oversold. Of the five points, ① was bearish last week.

[Technical viewpoint]

Looking at the Japanese market from a technical perspective, the difference in 200-day divergence from the NASDAQ is 3.5 points (about 1,180 yen in terms of the Nikkei 225) expensive in the medium to long term. On the other hand, the 200-day divergence from the NYDow is undervalued by 2.8 points in the medium to long term (about 950 yen in terms of the Nikkei 225)..

Japanese markets have been mixed in terms of strength against the NY Dow and NASDAQ. The VIX, an indicator of US market volatility, rose to 45.3 for the week. The Nikkei VI rose to 35.6 for the week. Both the US and Japanese markets are in a state of ‘extreme fear’.

The Nikkei 225 is below the 9-day and 25-day lines. The short-term trend has a ‘red light’.

The Nikkei 225 is below the equilibrium cloud. The overall divergence is -32.8% and the divergence from the 200-day moving average is -12.2%. As these three factors are negative, a ‘red light’ has been illuminated for the medium-term trend.

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

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

This is a ‘red light’ in the short term and a ‘red light’ in the medium term.

[Outlook for this week]

Looking at the US market from a fundamental perspective, recessionary fears are receding in the near-term. Other risk factors include inflation and rising interest rates due to the Russia-Ukraine war, economic recession due to energy shortages and deteriorating political conditions in the EU, U.S.-China trade friction, financial market turmoil caused by the bursting of China's real estate 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 down trend and a short-term down trend. The Japanese market is in a medium-term down trend, and the short-term is down trend.

In the US markets, the trade war is likely to remain a key focus this week. Also of interest will be the release of the Consumer Price Index (CPI) and the Producer Price Index (PPI) and how tariffs will affect inflation. Globally, retail sales in the eurozone and industrial production in Germany will be released, as well as inflation and trade data from China.

Last week, the Nikkei 225 fell well below its expected range. The upside was below ¥1030 and the downside was below ¥1590.

This week, the Nikkei 225 is expected to move between Bollinger Band -1σ (currently around JPY 35890) on the upside and Bollinger Band -3σ (currently around JPY 33820) on the downside.

This week, investors in the Japanese and US markets will have to work hard to find the ingredients for a rebound.

2025年3月30日日曜日

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

[Fundamental viewpoint]

In the US market last week, stock indices fell on the week due to a combination of intensifying trade frictions caused by the US administration's tariff policy, inflation fears and a decline in semiconductor stocks.

Weekly volatility NY Dow: -0.96%, NASDAQ: -2.59%, S&P 500: -1.53.

The difference in the yield spread between the Japanese and U.S. markets is 3.45 points undervalued for the Japanese market when the OECD's nominal GDP forecast for 2025 is taken into account. The reason for the undervaluation is the difference between the S&P 500's P/E ratio of 21.1 and the Nikkei 225's P/E ratio of 15.2 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 2025 relative to the current price of the Nikkei 225 will be 3.45 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 32.1 Or, the Nikkei 225 will be around 78,180 yen.

As a result, the Japanese market is undervalued by about 41,060 yen in the medium to long term.

Fundamentally, the Japanese market can be said to be about 41,060 less attractive than the US market. Weakness in the Japanese market was magnified last week.

[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 2025 GDP estimate (now +3.3%) by OECD

⑤ Foreign investors over-buying

Looking at recent movements

② As a result of the earnings announcements, the forecasted ROE of the Nikkei 225 index stood at +9.2%, an improvement of 0.1 percentage points compared to three months ago. The profit growth rate was +6.8%, an improvement of +4.7 percentage points compared to three months ago.

③ Although long-term interest rates in the US remained unchanged and the interest rate differential between the two countries narrowed from 2.74 to 2.7, the dollar moved against the yen in the range of ¥149 to ¥151. The Dollar Index rose -0.13% on the week.

⑤ The third week of March was likely to have been overbought, the fourth week of March was likely to have been oversold and this week is expected to be oversold. Of the five points, ① was bearish last week.

[Technical viewpoint]

Looking at the Japanese market from a technical perspective, the difference in 200-day divergence from the NASDAQ is 2.7 points (about 1,000 yen in terms of the Nikkei 225) expensive in the medium to long term. On the other hand, the 200-day divergence from the NYDow is undervalued by 2.2 points in the medium to long term (about 820 yen in terms of the Nikkei 225)..

Japanese markets are weak against the NY Dow and NASDAQ. The VIX, a measure of US market volatility, rose to 21.7 for the week. The Nikkei VI rose to 22.7 for the week. Both the US and Japanese markets are volatile.

The Nikkei 225 is below the 9-day and 25-day lines. The short-term trend has a ‘red light’.

The Nikkei 225 is below the equilibrium cloud. The overall divergence is -9.0% and the divergence from the 200-day moving average is -3.7%. As these three factors are negative, a ‘red light’ has been illuminated for the medium-term trend.

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

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

This is a ‘red light’ in the short term and a ‘red light’ in the medium term.

[Outlook for this week]

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

Investors in the US markets this week will be closely watching developments in the trade war as reciprocal tariffs on imports to the US will take effect on 2 April. The employment report will also be in focus, along with the ISM PMI. Globally, China's PMI, Japan's Tankan, Eurozone inflation and PMI and German manufacturing orders will also be closely watched.

Last week, the Nikkei 225 fell below its expected range. The upside was below ¥210 and the downside was below ¥180.

This week, the Nikkei 225 is expected to move between the 25-day line (currently around JPY 37600) on the upside and Bollinger Band -2σ (currently around JPY 36490) on the downside.

This week, the Nikkei 225 is likely to search for a second bottom.

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