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

 [Fundamental viewpoint]

In the U.S. markets last week, while concerns over the situation in the Middle East and rising crude oil prices weighed on the market, SK Hynix’s IPO provided a positive catalyst, sparking a wave of buying in AI and semiconductor stocks, resulting in mixed weekly performance for the stock indices.

 

Weekly percentage change: Dow Jones: -0.50%, NASDAQ: +1.74%, S&P 500: +1.23%

                                       

On the other hand, medium- to long-term risks include concerns over military conflict in the Middle East and the prolonged Ukraine conflict, financial instability and worries about a global economic slowdown stemming from the U.S. administration's tariff policies and rising interest rates, as well as fears of a real estate bubble bursting and China's economic slowdown. Consequently, there are also concerns about the arrival of stagflation. Furthermore, continued attention is required regarding geopolitical risks in Latin America and East Asia.

Considering the OECD’s nominal GDP forecasts for 2026, the Japanese market is overvalued by 0.22 points relative to the U.S. market. This overvaluation stems from the difference between the S&P 500’s P/E ratio of 21.7 and the projected P/E ratio of 18.3 for companies in the Nikkei 225 index for the current fiscal year, as well as the interest rate differential and the difference in GDP growth rates between Japan and the U.S.

For the Japanese and U.S. markets to reach equilibrium, the following conditions must be met:

Compared to the current Nikkei 225 price, the difference in GDP growth rates between Japan and the U.S. in 2026 must narrow by an additional 0.22 points relative to the OECD forecast (either Japan’s forecast must be revised upward or the U.S.’s must be revised downward). Alternatively, the projected P/E ratio for the current fiscal year for Nikkei 225 constituent stocks must reach approximately 17.6. Or, the Nikkei 225 must reach approximately 65,940 yen.

Consequently, the Japanese market is overvalued by about 2,610 yen in the medium to long term.

From a fundamental perspective, one could say that the Japanese market is about 2,6150 yen more attractive than the U.S. market. Last week, the Japanese market's strength waned.

 

[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 +2.9%) 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 the clouds on the Ichimoku Chart. The weekly leg of the NASDAQ was negative. The daily is a above the 200-day line and within the clouds on the Ichimoku Chart. This week, the focus will be on whether the NYDow can keep above the 25-day line.

②    Following the release of earnings results, the projected ROE for Nikkei 225 constituent stocks stood at +10.6%. This represents an improvement of +1.7 percentage points compared to three months ago. The profit growth rate was +12.2%, marking an improvement of +13.5 percentage points compared to three months ago.

③    Long-term U.S. interest rates rose, widening the interest rate differential between Japan and the U.S. from 1.71 to 1.84. The dollar-yen exchange rate moved in the direction of yen weakness, trading in the 161-yen to 162-yen range. The Dollar Index rose 0.09% for the week.

④    The OECD's nominal GDP growth rate for Japan and the U.S. in 2026 is expected to be +2.9% for Japan and +5.8% for the U.S., so the Japanese market is 2.9 percentage points inferior in this aspect.

⑤    It is highly likely that net buying occurred in the first week of July and net selling in the second week of July, and net buying is expected this week. Last week, out of the five points, ⑤ was a bearish factor.

 

[Technical viewpoint]

From a technical perspective, the Japanese market is overvalued by 13.2 percentage points (equivalent to approximately 9,050 yen for the Nikkei 225) relative to the NASDAQ based on the 200-day moving average deviation. Meanwhile, it is overvalued by 15.4 percentage points (equivalent to approximately 10,560 yen for the Nikkei 225) relative to the NY Dow based on the 200-day moving average deviation.

 

The Japanese market is performing better than the Dow Jones and NASDAQ. The VIX, an indicator of volatility in the U.S. market, fell to 15.0 for the week. The Nikkei VI rose to 38.1 for the week. The U.S. market is in a “neutral” state, while the Japanese market is in a state of “extreme fear.”

 

The Nikkei Average is below the 9-day and 25-day moving averages. A “red 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 +32.5%, and the deviation rate from the 200-day moving average is +15.4%. With 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.

The U.S. market is showing a “green light” in the short term and a “green light” in the medium term.

 

[Outlook for this week]

In the U.S. market, concerns about an economic downturn driven by rising long-term interest rates—a result of the prolonged conflict in the Middle East—and high oil prices are likely to be the primary focus for the time being.

 

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 down 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 160 and 162 yen per dollar range.

 

This week, U.S. markets will likely continue to keep a close eye on developments in the Middle East. In addition, earnings season is kicking off, with several major banks, as well as Netflix and J&J, scheduled to report their earnings. Meanwhile, attention will also be focused on Federal Reserve Chair Wash’s testimony before Congress. On the economic data front, the June Consumer Price Index (CPI), the University of Michigan Consumer Sentiment Index, retail sales, and housing-related data are scheduled for release. Globally, the UK’s May GDP figures, China’s second-quarter GDP, trade balance, money supply, industrial production, retail sales, unemployment rate, and housing prices are expected to be released.

 

Last week, the Nikkei Average moved within the expected range. The high was about 600 yen below the upper limit, and the low was about 580 yen above the lower limit.

This week, the Nikkei Average is expected to move within a range defined by the upper limit at the +1σ Bollinger Band (currently around 71,030 yen) and the lower limit at the -1σ Bollinger Band (currently 66,370 yen).

                           

This week, the Nikkei Average is likely to lack a clear direction due to uncertainty surrounding the situation in the Middle East and a growing trend toward selective investing in AI and semiconductor-related stocks.

Outlook for the Nikkei average this week [5 July 2026]

 [Fundamental viewpoint]

In the U.S. markets last week, although concerns over the profitability of massive investments in AI weighed on sentiment, there was also a move to buy back leading stocks that had been undergoing a correction recently, and stock indices rose for the week.

Weekly percentage change: Dow Jones: +1.97%, NASDAQ: +2.12%, S&P 500: +1.76%

                                       

On the other hand, medium- to long-term risks include concerns over military conflict in the Middle East and the prolonged Ukraine conflict, financial instability and worries about a global economic slowdown stemming from the U.S. administration's tariff policies and rising interest rates, as well as fears of a real estate bubble bursting and China's economic slowdown. Consequently, there are also concerns about the arrival of stagflation. Furthermore, continued attention is required regarding geopolitical risks in Latin America and East Asia.

Considering the OECD’s nominal GDP forecasts for 2026, the Japanese market is overvalued by 0.37 points relative to the U.S. market. This overvaluation stems from the difference between the S&P 500’s P/E ratio of 21.7 and the projected P/E ratio of 18.5 for companies in the Nikkei 225 index for the current fiscal year, as well as the interest rate differential and the difference in GDP growth rates between Japan and the U.S.

For the Japanese and U.S. markets to reach equilibrium, the following conditions must be met:

Compared to the current Nikkei 225 price, the difference in GDP growth rates between Japan and the U.S. in 2026 must narrow by an additional 0.37 points relative to the OECD forecast (either Japan’s forecast must be revised upward or the U.S.’s must be revised downward). Alternatively, the projected P/E ratio for the current fiscal year for Nikkei 225 constituent stocks must reach approximately 17.3. Or, the Nikkei 225 must reach approximately 65,300 yen.

Consequently, the Japanese market is overvalued by about 4,450 yen in the medium to long term.

From a fundamental perspective, one could say that the Japanese market is about 4,450 yen more attractive than the U.S. market. Last week, the strength of the Japanese market increased.

 

[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 +2.9%) 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 the clouds on the Ichimoku Chart. The weekly leg of the NASDAQ was negative. The daily is a above the 200-day line and within the clouds on the Ichimoku Chart. This week, the focus will be on whether the NYDow can keep above the 25-day line.

②    Following the release of earnings results, the projected ROE for Nikkei 225 constituent stocks stood at +10.5%. This represents an improvement of +1.6 percentage points compared to three months ago. The profit growth rate was +11.8%, marking an improvement of +13.3 percentage points compared to three months ago.

③    Although long-term U.S. interest rates rose, the interest rate differential between Japan and the U.S. narrowed from 1.78 to 1.71, and the dollar-yen exchange rate moved from the 162-yen range to the 160-yen range, reflecting a strengthening of the yen. The Dollar Index fell by 0.48% for the week.

④    The OECD's nominal GDP growth rate for Japan and the U.S. in 2026 is expected to be +2.9% for Japan and +5.8% for the U.S., so the Japanese market is 2.9 percentage points inferior in this aspect.

⑤    It is highly likely that net selling occurred in the fourth week of June and net buying in the first week of July, and net selling is expected this week. Last week, out of the five points, point ① was a bullish factor.

 

[Technical viewpoint]

From a technical perspective, the Japanese market is overvalued by 18.2 percentage points (equivalent to approximately 12,690 yen for the Nikkei 225) relative to the NASDAQ based on the 200-day moving average deviation. Meanwhile, it is overvalued by 18.0 percentage points (equivalent to approximately 12,550 yen for the Nikkei 225) relative to the NY Dow based on the 200-day moving average deviation.

 

The Japanese market is performing better than the Dow Jones and NASDAQ. The VIX, an indicator of volatility in the U.S. market, fell to 15.8 for the week. The Nikkei VI rose to 34.1 for the week. The U.S. market is in a state of “fear,” while the Japanese market is in a state of “extreme fear.”

 

The Nikkei Average is below the 9-day and above 25-day moving averages. A “yellow 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 +41.8%, and the deviation rate from the 200-day moving average is +26.9%. With 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 25-day and above 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]

In the U.S. market, concerns about an economic downturn driven by rising long-term interest rates—a result of the prolonged conflict in the Middle East—and high oil prices are likely to be the primary focus for the time being.

 

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 160 and 162 yen per dollar range.

 

In the U.S. markets this week, although energy prices have fallen, long-term interest rates remain high, and monetary policy has once again become the focus of market attention, with the upcoming release of the June FOMC minutes drawing particular interest. On the economic data front, the ISM Services PMI, existing home sales, and the trade balance will be released. Globally, attention will focus on Germany’s industrial production and trade statistics, Japan’s personal consumption and producer price index, China’s inflation rate, and OPEC’s decision on crude oil production levels.

 

Last week, the Nikkei Average traded above the expected range. The upper limit was exceeded by about 1,250 yen, and the lower limit by about 1,500 yen.

This week, the Nikkei Average is expected to trade within a range defined by the upper limit at the +1σ Bollinger Band (currently around 70,880 yen) and the lower limit at the -1σ Bollinger Band (currently 66,110 yen).

                           

The Nikkei 225 is likely to continue its downward trend this week unless concerns regarding the profitability of massive investments in AI are alleviated in the U.S. markets.

Outlook for the Nikkei average this week [28 June 2026]

 [Fundamental viewpoint]

In the U.S. markets last week, while falling crude oil prices provided some support, concerns over the profitability of massive investments in AI weighed on the markets, resulting in mixed weekly performance for the major stock indices.

Weekly percentage change: Dow Jones: +0.60%, NASDAQ: -4.60%, S&P 500: -1.95%

                                       

On the other hand, medium- to long-term risks include concerns over military conflict in the Middle East and the prolonged Ukraine conflict, financial instability and worries about a global economic slowdown stemming from the U.S. administration's tariff policies and rising interest rates, as well as fears of a real estate bubble bursting and China's economic slowdown. Consequently, there are also concerns about the arrival of stagflation. Furthermore, continued attention is required regarding geopolitical risks in Latin America and East Asia.

Considering the OECD’s nominal GDP forecasts for 2026, the Japanese market is overvalued by 0.12 points relative to the U.S. market. This overvaluation stems from the difference between the S&P 500’s P/E ratio of 21.5 and the projected P/E ratio of 17.3 for companies included in the Nikkei 225 for the current fiscal year, as well as the interest rate differential and the difference in GDP growth rates between Japan and the U.S.

For the Japanese and U.S. markets to reach equilibrium, the following conditions must be met:

Compared to the current Nikkei 225 price, the difference in GDP growth rates between Japan and the U.S. in 2026 must narrow by an additional 0.12 percentage points relative to the OECD forecast (either Japan’s forecast must be revised upward or the U.S.’s must be revised downward). Alternatively, the projected P/E ratio for the current fiscal year for Nikkei 225 constituent stocks must reach approximately 17.3. Or, the Nikkei 225 must reach approximately 67,890 yen.

Consequently, the Japanese market is overvalued by about 1,470 yen in the medium to long term.

From a fundamental perspective, one could say that the Japanese market is about 1,470 yen more attractive than the U.S. market. Last week, the strength of 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 +2.9%) 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 the clouds on the Ichimoku Chart. The weekly leg of the NASDAQ was negative. The daily is a above the 200-day line and the clouds on the Ichimoku Chart. This week, the focus will be on whether the NYDow can keep above the 25-day line.

②    Following the release of earnings results, the projected ROE for Nikkei 225 constituent stocks stood at +10.6%. This represents an improvement of +1.9 percentage points compared to three months ago. The profit growth rate was +10.2%, marking an improvement of +11.6 percentage points compared to three months ago.

③    Although U.S. long-term interest rates fell and the interest rate differential between Japan and the U.S. narrowed from 1.81 to 1.78, the dollar-yen exchange rate remained in the 161 range, trending toward a weaker yen. The Dollar Index rose 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 +2.9% for Japan and +5.8% for the U.S., so the Japanese market is 2.9 percentage points inferior in this aspect.

⑤    The third week of June saw a net buying position, and it is highly likely that the fourth week of June also saw a net buying position; a net selling position is expected this week. Last week, out of the five points, point ① was a bearish factor.

 

[Technical viewpoint]

From a technical perspective, the Japanese market is overvalued by 21.0 percentage points (equivalent to approximately 14,570 yen for the Nikkei 225) relative to the NASDAQ based on the 200-day moving average deviation. Meanwhile, it is overvalued by 20.6 percentage points (equivalent to approximately 14,290 yen for the Nikkei 225) relative to the NY Dow based on the 200-day moving average deviation.

 

The Japanese market is performing better than the Dow Jones and NASDAQ. The VIX, an indicator of volatility in the U.S. market, rose to 18.4 for the week. The Nikkei VI rose to 33.1 for the week. The U.S. market is in a state of “fear,” while the Japanese market is in a state of “extreme fear.”

 

The Nikkei Average is above 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 +44.7%, and the deviation rate from the 200-day moving average is +27.8%. With 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 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]

In the U.S. market, concerns about an economic downturn driven by rising long-term interest rates—a result of the prolonged conflict in the Middle East—and high oil prices are likely to be the primary focus for the time being.

 

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 160 and 162 yen per dollar range.

 

In the U.S. markets this week, the status of tanker traffic through the Strait of Hormuz is likely to be the focus of attention. On the economic front, key data points to watch include the June employment report, the JOLTS report, the ADP employment report, the ISM Manufacturing PMI, manufacturing orders, and the Case-Shiller Home Price Index. Globally, data such as the eurozone inflation rate, Japan’s industrial production, retail sales, and unemployment rate, as well as China’s PMI, will be released.

 

Last week, the Nikkei Average traded above the expected range. The upper limit was exceeded by about 330 yen, and the lower limit by about 1,030 yen.

This week, the Nikkei Average is expected to trade within a range defined by the upper limit at the +1σ Bollinger Band (currently around 70,200 yen) and the lower limit at the -1σ Bollinger Band (currently 65,010 yen).

                           

The Nikkei Average is likely to trend downward this week if concerns persist regarding the profitability of massive investments in AI.

Outlook for the Nikkei average this week [21 June 2026]

 [Fundamental viewpoint]

Last week, U.S. stock indices rose for the week, driven by a memorandum of understanding between the U.S. and Iran aimed at ending hostilities and a decline in crude oil prices.

Weekly percentage change: NY Dow: +0.71%, NASDAQ: +2.43%, S&P 500: +0.93%

                                       

On the other hand, medium- to long-term risks include concerns over military conflict in the Middle East and the prolonged Ukraine conflict, financial instability and worries about a global economic slowdown stemming from the U.S. administration's tariff policies and rising interest rates, as well as fears of a real estate bubble bursting and China's economic slowdown. Consequently, there are also concerns about the arrival of stagflation. Furthermore, continued attention is required regarding geopolitical risks in Latin America and East Asia.

Considering the OECD’s nominal GDP forecasts for 2026, the Japanese market is overvalued by 0.31 points relative to the U.S. market. This overvaluation stems from the difference between the S&P 500’s P/E ratio of 22.0 and the projected P/E ratio of 18.7 for the constituent stocks of the Nikkei 225 for the current fiscal year, as well as the interest rate differential and the difference in GDP growth rates between Japan and the U.S.

For the Japanese and U.S. markets to reach equilibrium, the following conditions must be met:

Compared to the current Nikkei 225 price, the difference in GDP growth rates between Japan and the U.S. in 2026 must narrow by an additional 0.31 percentage points relative to the OECD forecast (either Japan’s forecast must be revised upward or the U.S.’s must be revised downward). Alternatively, the projected P/E ratio for the current fiscal year for Nikkei 225 constituent stocks must reach approximately 17.7. Or, the Nikkei 225 must reach approximately 67,470 yen.

Consequently, the Japanese market is overvalued by about 3,780 yen in the medium to long term.

From a fundamental perspective, one could say that the Japanese market is about 3,780 yen more attractive than the U.S. market. Last week, the strength of the Japanese market increased.

 

[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 +2.9%) 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 the clouds on the Ichimoku Chart. The weekly leg of the NASDAQ was positive. The daily is a above the 200-day line and the clouds on the Ichimoku Chart. This week, the focus will be on whether the NYDow can keep above the 25-day line.

②    Following the release of earnings results, the projected ROE for Nikkei 225 constituent stocks stood at +10.6%. This represents an improvement of +1.9 percentage points compared to three months ago. The profit growth rate was +10.0%, marking an improvement of +11.4 percentage points compared to three months ago.

③    Although U.S. long-term interest rates fell and the interest rate differential between Japan and the U.S. narrowed from 1.85 to 1.81, the dollar-yen exchange rate moved in a direction of yen weakness, ranging from the 159-yen level to the 161-yen level. The Dollar Index rose 0.96% for the week.

④    The OECD's nominal GDP growth rate for Japan and the U.S. in 2026 is expected to be +2.9% for Japan and +5.8% for the U.S., so the Japanese market is 2.9 percentage points inferior in this aspect.

⑤    ⑤    It is highly likely that net selling occurred in the second week of June and net buying in the third week of June, and net buying is expected this week. Last week, out of the five points, ①, ③, and ④ were bullish factors.

 

[Technical viewpoint]

From a technical perspective, the Japanese market is overvalued by 20.7 percentage points (equivalent to approximately ¥14,750 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 26.1 percentage points (equivalent to approximately ¥18,600 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 performing better than the Dow Jones and NASDAQ. The VIX, an indicator of volatility in the U.S. market, fell to 16.8 for the week. The Nikkei VI fell to 29.9 for the week. The U.S. market is in a “neutral” state, while the Japanese market is in a “fear” state.

The Nikkei Average is above 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 +60.8%, and the deviation rate from the 200-day moving average is +33.0%. With 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, concerns about an economic downturn driven by rising long-term interest rates—a result of the prolonged conflict in the Middle East—and high oil prices are likely to be the primary focus for the time being.

 

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 160 and 162 yen per dollar range.

 

In the U.S. markets this week, attention will likely focus on the resumption of tanker traffic through the Strait of Hormuz following the agreement between the U.S. and Iran to lift the naval blockade. On the economic front, key indicators to watch include the PCE Price Index, durable goods orders, the S&P PMI, and the University of Michigan Consumer Sentiment Index. Globally, PMIs for Japan, Germany, the Eurozone, and the U.K., as well as Germany’s business climate index, are scheduled for release.

 

Last week, the Nikkei Average traded above the projected range. The high was about 340 yen above the upper limit, and the low was about 2,310 yen above the lower limit.

This week, the Nikkei Average is expected to trade within a range defined by the upper limit at the +2σ Bollinger Band (currently around 71,860 yen) and the lower limit at the 25-day moving average (currently 65,730 yen).

 

The Nikkei Average is likely to continue its upward trend for the time being this week, provided that the U.S. and Iran honor their agreement to lift the naval blockade and crude oil tankers continue to pass through the Strait of Hormuz without incident.

Outlook for the Nikkei average this week [14 June 2026]

 [Fundamental viewpoint]

Last week, U.S. stock markets rose for the week after President Trump indicated that he might sign an agreement with Iran as early as this weekend.

Weekly percentage change: Dow Jones: +0.66%, NASDAQ: +0.70%, S&P 500: +0.65%

                                       

On the other hand, medium- to long-term risks include concerns over military conflict in the Middle East and the prolonged Ukraine conflict, financial instability and worries about a global economic slowdown stemming from the U.S. administration's tariff policies and rising interest rates, as well as fears of a real estate bubble bursting and China's economic slowdown. Consequently, there are also concerns about the arrival of stagflation. Furthermore, continued attention is required regarding geopolitical risks in Latin America and East Asia.

The difference in the yield spread between the Japanese and U.S. markets is 1.31 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 21.5 and the Nikkei 225's P/E ratio of 17.9 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 1.31 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 23.3 Or, the Nikkei 225 will be around 86,130 yen.

As a result, the Japanese market is undervalued by about 20,110 yen in the medium to long term.

From a fundamental perspective, one could argue that the Japanese market is about 20,110 yen less attractive than the U.S. market. Last week, the weakness in the Japanese market narrowed.

 

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

②    Following the release of earnings results, the projected ROE for Nikkei 225 constituent stocks stood at +10.6%. This represents an improvement of +1.7 percentage points compared to three months ago. The profit growth rate was +9.7%, marking an improvement of +9.5 percentage points compared to three months ago.

③    Although U.S. long-term interest rates fell and the interest rate differential between Japan and the U.S. narrowed from 1.89 to 1.85, the dollar-yen exchange rate remained range-bound between the 159 and 160 yen levels. The Dollar Index fell 0.26% for the week.

④    The OECD's nominal GDP growth rate for Japan and the U.S. in 2026 is expected to be +3.2% for Japan and +4.7% for the U.S., so the Japanese market is 1.7 percentage points inferior in this aspect.

⑤    The first week of June saw net selling, and it is highly likely that the second week of June also saw net selling; net buying is expected this week. Last week, out of the five points, point ① was a bullish factor.

 

[Technical viewpoint]

From a technical perspective, the Japanese market is overvalued by 14.6 percentage points (equivalent to approximately ¥9,640 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 18.3 percentage points (equivalent to approximately ¥12,080 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 performing better than the Dow Jones and NASDAQ. The VIX, an indicator of volatility in the U.S. market, fell to 17.7 for the week. The Nikkei VI rose to 37.3 for the week. While the U.S. market is in a state of “fear,” the Japanese market is in a state of “extreme fear.”

 

The Nikkei Average is above 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 +39.8%, and the deviation rate from the 200-day moving average is +24.8%. With 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 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]

In the U.S. market, concerns about an economic downturn driven by rising long-term interest rates—a result of the prolonged conflict in the Middle East—and high oil prices are likely to be the primary focus for the time being.

 

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 159 and 161 yen per dollar range.

 

In the U.S. markets this week, the question of whether a memorandum of understanding is reached between the U.S. and Iran is likely to have a significant impact on trading. In terms of economic indicators, the manufacturing PMI, industrial production, and retail sales will be closely watched. Regarding monetary policy, the Federal Reserve, the Bank of Japan, and the Bank of England are set to announce their policy interest rates. Globally, data releases will include Japan’s Consumer Price Index (CPI) and machinery orders; Germany’s business sentiment index; the UK’s CPI and retail sales; and China’s industrial production, retail sales, unemployment rate, housing prices, and fixed-asset investment.

 

Last week, the Nikkei 225 outperformed the expected range. The upper limit was exceeded by about 620 yen, and the lower limit by about 520 yen.

This week, the Nikkei 225 is expected to trade within a range defined by the upper limit at the +2σ Bollinger Band (currently around 68,710 yen) and the lower limit at the 25-day moving average (currently 64,190 yen).

 

The Nikkei Average is expected to get off to a firm start this week, as investor sentiment continues to improve significantly on hopes that the fighting between the U.S. and Iran will come to an end. If the fighting does indeed end, the index could see further gains.

Outlook for the Nikkei average this week [7 June 2026]

 [Fundamental viewpoint]

In the U.S. markets last week, the May employment report exceeded market expectations, signaling an improvement in the labor market. However, stock indices fell for the week as investors reacted negatively to the 10-year Treasury yield rising above 4.5% and the 30-year yield breaking through the 5% mark.

 

Weekly percentage change: Dow Jones: -0.32%, NASDAQ: -4.68%, S&P 500: -2.59%

                                       

On the other hand, medium- to long-term risks include concerns over military conflict in the Middle East and the prolonged Ukraine conflict, financial instability and worries about a global economic slowdown stemming from the U.S. administration's tariff policies and rising interest rates, as well as fears of a real estate bubble bursting and China's economic slowdown. Consequently, there are also concerns about the arrival of stagflation. Furthermore, continued attention is required regarding geopolitical risks in Latin America and East Asia.

The difference in the yield spread between the Japanese and U.S. markets is 1.51 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 22.2 and the Nikkei 225's P/E ratio of 17.8 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 1.51 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 24.3 Or, the Nikkei 225 will be around 91,060 yen.

As a result, the Japanese market is undervalued by about 24,470 yen in the medium to long term.

From a fundamental perspective, one could say that the Japanese market is about 24,470 yen less attractive than the U.S. market. Last week, the 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 negative last week. The daily is above the 200-day line and the clouds on the Ichimoku Chart. The weekly leg of the NASDAQ was negative. The daily is a above the 200-day line and the clouds on the Ichimoku Chart. This week, the focus will be on whether the NYDow can keep above the 25-day line.

②    Following the release of earnings results, the projected ROE for Nikkei 225 constituent stocks stood at +10.6%. This represents an improvement of +1.6 percentage points compared to three months ago. The profit growth rate was +9.1%, marking an improvement of +8.8 percentage points compared to three months ago.

③    Long-term U.S. interest rates rose, widening the interest rate differential between Japan and the U.S. from 1.79 to 1.89. As a result, the dollar-yen exchange rate moved toward a weaker yen, fluctuating between the 159 and 160 yen ranges. The Dollar Index rose 1.14% for the week.

④    The OECD's nominal GDP growth rate for Japan and the U.S. in 2026 is expected to be +3.2% for Japan and +4.7% for the U.S., so the Japanese market is 1.7 percentage points inferior in this aspect.

⑤    Long-term U.S. interest rates rose, widening the interest rate differential between Japan and the U.S. from 1.79 to 1.89. As a result, the dollar-yen exchange rate moved toward a weaker yen, fluctuating between the 159 and 160 yen ranges. The Dollar Index rose 1.14% for the week.

 

[Technical viewpoint]

From a technical perspective, the Japanese market is overvalued by 17.3 percentage points (equivalent to approximately ¥11,520 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 21.2 percentage points (equivalent to approximately ¥14,120 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 performing better than the Dow Jones and NASDAQ. The VIX, an indicator of volatility in the U.S. market, rose to 21.5 for the week. The Nikkei VI rose to 28.4 for the week. The U.S. market is in a state of “fear,” and the Japanese market is also in a state of “fear.”

 

The Nikkei Average is above 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 +46.3%, and the deviation rate from the 200-day moving average is +27.2%. With 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]

In the U.S. market, concerns about an economic downturn driven by rising long-term interest rates—a result of the prolonged conflict in the Middle East—and high oil prices are likely to be the primary focus for the time being.

 

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 159 and 161 yen per dollar range.

 

In the U.S. markets this week, the ongoing tensions between the U.S. and Iran are likely to continue to influence stock prices. In terms of economic indicators, attention will focus on the Consumer Price Index (CPI) and Producer Price Index (PPI), as well as existing home sales and the trade balance. Globally, China’s trade statistics and inflation indicators, the ECB’s monetary policy decision, and the UK and Germany’s trade balances and industrial production figures are scheduled for release. Additionally, SpaceX’s largest-ever IPO and the first OPEC+ meeting without UAE participation will be in the spotlight.

 

Last week, the Nikkei 225 fell below the projected range. The high was about 1,730 yen lower than the projected range, and the low was about 200 yen lower.

This week, the Nikkei 225 is expected to move within a range bounded by the upper limit of the Bollinger Band +1σ (currently around 66,060 yen) and the lower limit of the Bollinger Band -1σ (currently 60,760 yen).

 

This week, the Nikkei Average remains at a critical juncture as tensions between the U.S. and Iran continue to fluctuate between a potential ceasefire and renewed hostilities; however, if crude oil prices continue to fall, the index is likely to move along the +2σ line of the Bollinger Bands.

Outlook for the Nikkei average this week [31 May 2026]

 [Fundamental viewpoint]

In the U.S. markets last week, crude oil prices fell on speculation that negotiations between the U.S. and Iran were making progress with Pakistan acting as a mediator, while stock indices rose for the week.

Weekly percentage change: Dow Jones: +0.90%, NASDAQ: +2.39%, S&P 500: +1.43%

                                       

On the other hand, medium- to long-term risks include concerns over military conflict in the Middle East and the prolonged Ukraine conflict, financial instability and worries about a global economic slowdown stemming from the U.S. administration's tariff policies and rising interest rates, as well as fears of a real estate bubble bursting and China's economic slowdown. Consequently, there are also concerns about the arrival of stagflation. Furthermore, continued attention is required regarding geopolitical risks in Latin America and East Asia.

The difference in the yield spread between the Japanese and U.S. markets is 1.36 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 22.4 and the Nikkei 225's P/E ratio of 18.1 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 2026 relative to the current price of the Nikkei 225 will be 1.36 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 23.9 Or, the Nikkei 225 will be around 87,880 yen.

As a result, the Japanese market is undervalued by about 21,550 yen in the medium to long term.

From a fundamental perspective, one could say that the Japanese market is about 21,550 yen less attractive than the U.S. market. Last week, the 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 the clouds on the Ichimoku Chart. The weekly leg of the NASDAQ was positive. The daily is a above the 200-day line and the clouds on the Ichimoku Chart. This week, the focus will be on whether the NYDow can keep above the 25-day line.

②    Following the release of earnings results, the projected ROE for Nikkei 225 constituent stocks stood at +10.6%. This represents an improvement of +1.7 percentage points compared to three months ago. The profit growth rate was +9.3%, marking an improvement of +9.3 percentage points compared to three months ago.

③    Although U.S. long-term interest rates fell and the interest rate differential between Japan and the U.S. narrowed from 1.82 to 1.79, the dollar-yen exchange rate moved toward a weaker yen, fluctuating between the 158 and 159 yen ranges. The Dollar Index fell by 0.38% over the week.

④    The OECD's nominal GDP growth rate for Japan and the U.S. in 2026 is expected to be +3.2% for Japan and +4.7% for the U.S., so the Japanese market is 1.7 percentage points inferior in this aspect.

⑤    Net buying was recorded in the third week of May, and it is highly likely that net buying also occurred in the fourth week of May; net buying is expected this week. Last week, points ① and ② were bullish factors out of the five points.

 

[Technical viewpoint]

From a technical perspective, the Japanese market is overvalued by 12.4 percentage points (equivalent to approximately ¥8,220 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 21.7 percentage points (equivalent to approximately ¥14,390 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 performing better than the Dow Jones and NASDAQ. The VIX, an indicator of volatility in the U.S. market, fell to 15.3 for the week. The Nikkei VI fell to 26.0 for the week. The U.S. market is in an “optimistic” state, while the Japanese market is in a “fearful” state.

 

The Nikkei Average is above 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 +50.7%, and the deviation rate from the 200-day moving average is +28.4%. With 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 the above 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, concerns about an economic downturn driven by rising long-term interest rates—a result of the prolonged conflict in the Middle East—and high oil prices are likely to be the primary focus for the time being.

 

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 158 and 160 yen per dollar range.

 

In the U.S. markets this week, the ongoing tensions between the U.S. and Iran are likely to continue influencing stock prices. On the economic front, attention will focus on the employment report, as well as the ISM Manufacturing PMI, JOLTS job openings, and the ADP employment report. Additionally, earnings reports from companies such as Broadcom and CrowdStrike are expected to provide insights into the AI business. Globally, attention will be focused on China’s PMI, as well as the eurozone’s inflation rate and retail sales figures.

 

Last week, the Nikkei 225 exceeded the expected range. The upper limit was exceeded by about 1,070 yen, and the lower limit by about 2,280 yen.

This week, the Nikkei 225 is expected to move within a range defined by the upper limit at the +3σ Bollinger Band (currently around 68,320 yen) and the lower limit at the +1σ Bollinger Band (currently 64,040 yen).

 

This week, the Nikkei Average remains at a critical juncture as tensions between the U.S. and Iran continue to fluctuate between a potential ceasefire and renewed hostilities; however, if crude oil prices continue to fall, the index is likely to move along the +2σ line of the Bollinger Bands.