Nikkei average forecast: 2025

2025年3月10日月曜日

Outlook for the Nikkei average this week [9 March 2024]

[Fundamental viewpoint]

Stock indices fell on the week in the US market last week due to a slowdown in AI-related demand and persistent uncertainty surrounding the US administration's tariff policy.

Weekly volatility NY Dow: -2.37%, NASDAQ: -3.45%, S&P 500: -3.10%.

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 3.68 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 14.9 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 2025 relative to the current price of the Nikkei 225 will be 3.68 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 32.9 Or, the Nikkei 225 will be around 81,600 yen.

As a result, the Japanese market is undervalued by about 44,710 yen in the medium to long term.

Fundamentally, the Japanese market can be said to be about 44,710 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 above the 200-day line and below the clouds on the Ichimoku Chart. The weekly leg of the NASDAQ was negative. The daily is above 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 +6.5%, an improvement of +4.2 percentage points compared to three months ago.

③ Although long-term interest rates in the US rose, the interest rate differential between the US and Japan narrowed from 2.85 to 2.79 and the dollar moved towards a stronger yen in the range of ¥151 to ¥146. The Dollar Index fell -3.40% 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 fourth week of February was oversold, the first week of March was likely oversold and this week is expected to be oversold. Of the five points, ① and ③ were bearish last week.

[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 the 200-day divergence rate from the NASDAQ (about 1110 yen when converted to the Nikkei 225). On the other hand, the difference in the 200-day divergence from the NYDow is undervalued by 6.5 points in the medium to long term (about 2400 yen when calculated for the Nikkei 225).

Japanese markets are weak against the NY Dow and NASDAQ. The VIX, a measure of US market volatility, rose to 23.4 for the week. The Nikkei VI rose to 28.6 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 -14.1% and the divergence from the 200-day moving average is -4.6%. 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 and 25-day and above 200-day lines. It is below the clouds of the equilibrium chart.

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

This is a ‘red 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 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 no trend and a short-term down trend. The Japanese market is in a medium-term down trend, and the short-term is down 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 147 and 150 yen.

In the US markets this week, the focus will be on the US inflation rate, the JOLTS jobless rate and the University of Michigan consumer sentiment index to assess the US economy. Globally, the UK's January GDP growth, industrial production, German industrial production and China's CPI and PPI will be in focus.

Last week, the Nikkei 225 moved mostly within the expected range. The upside was below ¥70 and the downside was below ¥40.

This week, the Nikkei 225 is expected to move between the 25-day line (currently around JPY 38540) on the upside and Bollinger Band -2σ (currently around JPY 37020) on the downside.

The impact of President Trump's policies and recession fears is likely to continue this week. The Nikkei 225 is likely to have entered a downtrend towards the end of the year, but for the time being, it is likely to continue to wait for new material to trigger a rebound.

2025年3月2日日曜日

Outlook for the Nikkei average this week [3 March 2024]

[Fundamental viewpoint]

Stock indices were mixed on the week in the US market last week, reacting negatively to the Trump administration's tariffs policy, but favouring lower long-term interest rates.

Weekly change NY Dow: +0.95%, NASDAQ: -3.47%, S&P 500: -0.98%.

The difference in the yield spread between the Japanese and U.S. markets is 3.92 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 21.6 and the Nikkei 225's P/E ratio of 14.7 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 2025 relative to the current price of the Nikkei 225 will be 3.92 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 34.8 Or, the Nikkei 225 will be around 87,760 yen.

As a result, the Japanese market is undervalued by about 50,610 yen in the medium to long term.

Fundamentally, the Japanese market can be said to be about 50,610 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 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 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.

③ Although long-term interest rates in the US declined and the interest rate differential between the two countries narrowed from 3.01 to 2.85, the US dollar moved in a weaker direction against the yen in the range of 148 to 150 yen. The Dollar Index rose +0.87% on the week.

⑤ The third and fourth weeks of February were likely to have been oversold, and this week is expected to be overbought. Last week, of the five points, ① was bearish.

[Technical viewpoint]

Looking at the Japanese market from a technical perspective, it is undervalued by 6.0 points in the medium to long term in terms of the difference in the 200-day divergence rate from the NASDAQ (about 2230 yen when converted to the Nikkei 225). On the other hand, the difference in the 200-day divergence from the NYDow is undervalued by 8.5 points in the medium to long term (about 3160 yen when calculated for the Nikkei 225).

Japanese markets are weak against the NY Dow and NASDAQ. The VIX, a measure of US market volatility, rose to 19.6 for the week. The Nikkei VI rose to 27.0 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 -13.3% and the divergence from the 200-day moving average is -3.9%. 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 and below 25-day and above 200-day lines. It is also above the clouds of the equilibrium chart.

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

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

[Outlook for this week]

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 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 in the 150-147 range.

In the US markets this week, attention will be focused on the February jobs report. Also of interest will be the ISM Non-Manufacturing Index and the Beige Book, including the ISM Manufacturing Index and manufacturing orders. Globally, attention will be focused on the ECB's regular Governing Council meeting on policy rates, China's PMIs, consumer price index and GDP in the eurozone, and the speech by Bank of Japan Governor Ueda.

Last week, the Nikkei 225 fell below its expected range. The upside was below ¥640 and the downside was below ¥330.

This week, the Nikkei 225 is expected to move between the Bollinger Band -1σ (currently around JPY 38370) on the upside and Bollinger Band -3σ (currently around JPY 37170) on the downside.

The week is likely to be affected by President Trump's policies and recession fears, but the Nikkei 225 seems likely to have entered a downtrend towards the end of the financial year, but for the time being is awaiting material to trigger a reversal.

2025年2月24日月曜日

Outlook for the Nikkei average this week [24 February 2024]

[Fundamental viewpoint]

In the US markets last week, stock indices fell over the week on concerns about deteriorating economic indicators and the negative impact of the Trump administration's tariff policies on the US economy.

Weekly change NY Dow: -2.51%, NASDAQ: -2.51%, S&P 500: -1.66%.

The difference in the yield spread between the Japanese and U.S. markets is 4.06 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 22.6 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 4.06 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 39.7 Or, the Nikkei 225 will be around 101,280 yen.

As a result, the Japanese market is undervalued by about 62,510 yen in the medium to long term.

Fundamentally, the Japanese market can be said to be about 62,510 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 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 in 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 +6.8%, an improvement of +4.8 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 narrowed from 3.13 to 3.01, the dollar moved towards a stronger yen in the range of ¥152 to ¥148. The Dollar Index fell -0.14% on the week.

⑤ The second week of February was likely to have been overbought, the third week of February was likely to have been oversold and this week is expected to be overbought. Of the five points, ① and ③ were bearish last week.

[Technical viewpoint]

Looking at the Japanese market from a technical perspective, it is undervalued by 5.8 points in the medium to long term in terms of the difference in the 200-day divergence rate from the NASDAQ (about 2250 yen when converted to the Nikkei 225). On the other hand, the difference in the 200-day divergence from the NYDow is undervalued by 3.5 points in the medium to long term (about 1360 yen when calculated for the Nikkei 225).

Japanese markets remain weak against the NY Dow and NASDAQ. The VIX, a measure of US market volatility, rose to 18.2 for the week. The Nikkei VI fell to 20.8 for the week. The US market and the Japanese market is somewhat 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 clouds of the equilibrium chart. The overall divergence is +0.3% and the divergence from the 200-day moving average is +0.3%. As these two factors are nrgative, a ‘yellow signal’ is lit for the medium-term trend.

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

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

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

[Outlook for this week]

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 up trend.

This week, US markets will focus on speeches by several senior Fed officials, along with key economic data such as personal income and expenditure, PCE price index, durable goods orders, revised Q4 GDP growth and CB consumer sentiment. In the housing sector, the S&P/Case-Shiller house price index and new and pending home sales will be in focus. Globally, the releases will include French and Italian inflation, Indian GDP growth, German inflation and the Ifo business climate index, and retail sales.

Last week, the Nikkei 225 fell below its expected range. The upside was below ¥470 and the downside was below ¥280.

This week, the Nikkei 225 is expected to move between the 25-day line (currently around JPY 39140) on the upside and Bollinger Band -3σ (currently around JPY 37930) on the downside.

The Nikkei 225 is likely to be affected by President Trump's policies and recession fears again this week, but the Nikkei 225 is likely to face a critical moment to see whether or not it will hold up and move away from the lower end of the market.

2025年2月16日日曜日

Outlook for the Nikkei average this week [16 February 2024]

[Fundamental viewpoint]

In the US markets last week, stock indices rose for the week as the Trump administration's tariffs were expected to be delayed, temporarily diminishing excessive market concerns about inflation and trade frictions.

Weekly volatility NY Dow: +0.55%, NASDAQ: +2.58%, S&P 500: +1.42%.

The difference in the yield spread between the Japanese and U.S. markets is 4.12 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 22.4 and the Nikkei 225's P/E ratio of 15.3 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 4.12 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 41.2 Or, the Nikkei 225 will be around 105,590 yen.

As a result, the Japanese market is undervalued by about 66,440 yen in the medium to long term.

Fundamentally, the Japanese market can be said to be about 66,440 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 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 in the clouds of the Ichimoku Chart. This week, the focus will be on whether or not the NY Dow is able to keep 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 +0.3 percentage points compared to three months ago. The profit growth rate was +6.7%, an improvement of +5.6 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 3.20 to 3.13, the dollar moved in a weaker direction against the yen in the range of ¥151 to ¥154. The Dollar Index fell -1.21% on the week.

⑤ The first week of February was likely oversold, the second week of February 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 8,1 points in the medium to long term in terms of the difference in the 200-day divergence rate from the NASDAQ (about 3170 yen when converted to the Nikkei 225). On the other hand, the difference in the 200-day divergence from the NYDow is undervalued by 5.5 points in the medium to long term (about 2150 yen when calculated for the Nikkei 225).

Japanese markets remain weak against the NY Dow and NASDAQ. The VIX, a measure of US market volatility, fell to 14.8 for the week. The Nikkei VI fell slightly to 21.3 for the week. The US market is optimistic and the Japanese market is somewhat volatile.

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 clouds of the equilibrium chart. The overall divergence is +1.7% and the divergence from the 200-day moving average is +1.3%. As these two factors are positive, a ‘yellow signal’ is lit for the medium-term trend.

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

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

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

[Outlook for this week]

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 up trend.

This week, the US market will focus on the release of the FOMC minutes and speeches by several Fed officials, along with housing starts, existing home sales and the S&P Global PMI. Globally, China's interest rate decision and UK and Japanese inflation and PMIs will be released.

Last week, the Nikkei 225 was above its expected range. The upper price was above ¥440 and the lower price was above ¥460.

This week, the Nikkei 225 is expected to move between the Bollinger Band +2σ on the upside (currently around JPY 40010) and the Bollinger Band -1σ on the downside (currently around JPY 38660).

The Nikkei 225 is likely to be affected by President Trump's policies and earnings announcements again this week, but the Nikkei 225 is likely to move in a range with little sense of direction.

2025年2月9日日曜日

Outlook for the Nikkei average this week [9 February 2024]

[Fundamental viewpoint]

Stock indices fell on the week in the US market last week, driven by the Trump administration's tariff policy.

Weekly volatility NY Dow: -0.54%, NASDAQ: -0.53%, S&P 500: -0.24%.

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 68,500 yen in the medium to long term.

Fundamentally, the Japanese market can be said to be about 68,500 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 in the crosshairs 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 in the clouds of the Ichimoku Chart. This week, the focus will be on whether or not the NY Dow is able tokeep 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 +0.3 percentage points compared to three months ago. The profit growth rate was +5.5%, an improvement of +4.1 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 3.31 to 3.20, moving the yen against the dollar in the range of 155 to 150 yen. The Dollar Index fell -0.37% on the week.

⑤ The fourth week of January was oversold, the first week of February was likely oversold and this week is expected to be oversold. Of the five points, ① and ③ were bearish last week.

[Technical viewpoint]

Looking at the Japanese market from a technical perspective, it is undervalued by 6.7 points in the medium to long term in terms of the difference in the 200-day divergence rate from the NASDAQ (about 2600 yen when converted to the Nikkei 225). On the other hand, the difference in the 200-day divergence from the NYDow is undervalued by 6.2 points in the medium to long term (about 2400 yen when calculated for the Nikkei 225).

Japanese markets are weak against the NY Dow and NASDAQ. The VIX, a measure of US market volatility, rose to 16.5 for the week. The Nikkei VI rose to 21.6 for the week. The US market is optimistic and the Japanese market is somewhat 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 -1.2% and the divergence from the 200-day moving average is +0.4%. As these two factors are negative, a ‘yellow light’ has been given to the medium-term trend.

The price is now in a ‘yellow light’.

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

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

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

[Outlook for this week]

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 no trend, and the short-term is down trend.

In the US markets this week, attention will be focused on the Consumer Price Index (CPI) and Fed Chair Powell's congressional testimony. Earnings announcements from McDonald's, Coca-Cola and Applied Materials will also be of interest. Outside the US, attention will be focused on inflation in China and India, GDP growth in the UK and Eurozone, and monetary policy decisions in Russia.

Last week, the Nikkei 225 fell below its expected range. The upside was 650 below and the downside was 380 below.

The expected range for the Nikkei 225 this week is between the 25-day line (currently around JPY 39220) on the upside and Bollinger Band -2σ (currently around JPY 38170) on the downside.

The week is likely to be affected by President Trump's policies and earnings announcements, but the Nikkei 225 is likely to remain firm, albeit volatile.

2025年2月2日日曜日

Outlook for the Nikkei average this week [2 February 2024]

[Fundamental viewpoint]

Stock indices were mixed during the week in the US market last week, with good-performing stocks being bought, while tech stocks were sold off due to the DeepSeek shock.

Weekly volatility NY Dow: +0.27%, NASDAQ: -1.64%, S&P 500: -1.00%.

The difference in the yield spread between the Japanese and U.S. markets is 3.95 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 22.3 and the Nikkei 225's P/E ratio of 16.1 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 3.95 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 44.1 Or, the Nikkei 225 will be around 108,540 yen.

As a result, the Japanese market is undervalued by about 68,970 yen in the medium to long term.

Fundamentally, the Japanese market can be said to be about 68,970 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 positive last week. The daily chart is above the 200-day line and above the clouds of the Ichimoku Chart. The NASDAQ's weekly leg was positive last week. The daily chart is above the 200-day line and above the equilibrium cloud. This week, the focus will be on whether or not the NY Dow is able tokeep above the 25-day line.

② As a result of the earnings announcements, the forecasted ROE of the Nikkei 225 index stood at +9.1%, an improvement of +0.3 percentage points compared to three months ago. The profit growth rate was +2.5%, an improvement of +0.9 percentage points compared to three months ago.

③ Long-term interest rates in the US fell and the interest rate differential between the two countries narrowed from 3.41 to 3.31, with the dollar moving in the direction of a stronger yen in the range of 156 to 153 yen. The Dollar Index rose +0.96% on the week.

⑤ The third week of January was overbought, the fourth week of January was likely overbought and this week is expected to be overbought. Of the five points, ③ was bearish last week.

[Technical viewpoint]

Looking at the Japanese market from a technical perspective, it is undervalued by 5.8 points in the medium to long term in terms of the difference in the 200-day divergence rate from the NASDAQ (about 2300 yen when converted to the Nikkei 225). On the other hand, the difference in the 200-day divergence from the NYDow is undervalued by 5.2 points in the medium to long term (about 2060 yen when calculated for the Nikkei 225).

Japanese markets are weak against the NY Dow and NASDAQ. The VIX, a measure of US market volatility, rose to 16.4 for the week. The Nikkei VI rose to 20.4 for the week. The US market is optimistic and the Japanese market is somewhat volatile.

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

The Nikkei 225 is above the equilibrium cloud. The overall divergence is +4.3% and the divergence from the 200-day moving average is +2.4%. As these three factors are negative, a ‘green light’ has been illuminated for the medium-term trend.

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

The NASDAQ is below the 9-day, and above 25-day and 200-day lines. It is also above 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 technical aspects, the U.S. market is in a medium-term no trend and a short-term up trend. The Japanese market is in a medium-term down trend, and the short-term is down trend.

Analysis of the foreign exchange market shows that the yen has turned weaker since bottoming out at the 140 yen level, which was reached in September 2024. This week, the yen is expected to fall to the ¥155to ¥153range.

This week, the US markets will be dominated by the jobs report, while the ISM PMI will provide new insights into the economy. Also in focus will be President Trump's policies, particularly the implementation of 25% tariffs on imports from Canada and Mexico, which will take effect on 1 February. In addition, Amazon and Alphabet, PepsiCo, AMD, Pfizer, Walt Disney and Qualcomm will announce their quarterly results. Globally, the focus will be on country PMIs, Eurozone inflation and German manufacturing orders.

Last week, the Nikkei 225 fell below its expected range. The upside was below ¥650 and the downside was below ¥930.

This week, the Nikkei 225 is expected to move between the Bollinger Band +1σ (currently around JPY 39870) on the upside and the Bollinger Band -1σ (currently around JPY 38830) on the downside.

This week is likely to be influenced by President Trump's policies and earnings announcements, but the Nikkei 225 is likely to remain firm, albeit somewhat volatile.

2025年1月26日日曜日

Outlook for the Nikkei average this week [26 January 2024]

[Fundamental viewpoint]

In the US markets last week, stock indices rose over the week as Trump's inaugural announcements were generally well received and US long-term interest rates fell.

Weekly change NY Dow: +2.15%, NASDAQ: +1.65%, S&P 500: +1.74%.

The difference in the yield spread between the Japanese and U.S. markets is 4.10 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 22.3 and the Nikkei 225's P/E ratio of 15.9 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 2025 relative to the current price of the Nikkei 225 will be 4.10 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 46.0 Or, the Nikkei 225 will be around 115,290 yen.

As a result, the Japanese market is undervalued by about 75,360 yen in the medium to long term.

Fundamentally, the Japanese market can be said to be about 75,360 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

② As a result of the earnings announcements, the forecasted ROE of the Nikkei 225 index stood at +9.1%, an improvement of +0.4 percentage points compared to three months ago. The profit growth rate was +2.4%, an improvement of +0.3 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 3.44 to 3.41, moving the yen against the dollar in the range of ¥156 to ¥154. The Dollar Index fell -1.77% on the week.

⑤ The second week of January was likely to have been oversold, the third week of January 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 7.4 points in the medium to long term in terms of the difference in the 200-day divergence rate from the NASDAQ (about 2950 yen when converted to the Nikkei 225). On the other hand, the difference in the 200-day divergence from the NYDow is undervalued by 4.5 points in the medium to long term (about 1800 yen when calculated for the Nikkei 225).

Japanese markets remain weak against the NY Dow and NASDAQ. The VIX, a measure of US market volatility, fell to a weekly low of 14.9. The Nikkei VI fell to a weekly low of 19.7. The US market is optimistic and the Japanese market is slightly optimistic.

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

The Nikkei 225 is above the equilibrium cloud. The overall divergence is +7.3% and the divergence from the 200-day moving average is +3.3%. As these three factors are negative, a ‘green light’ has been illuminated for the medium-term trend.

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

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

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

[Outlook for this week]

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

This week's US markets will be focused on President Trump's policy announcements, the Fed's monetary policy decisions and corporate results from Microsoft, Meta, Tesla and Apple. There are also a number of economic indicators to be released this week, with GDP growth in the US, eurozone, Germany and France, US PCE data and preliminary inflation figures for Germany and France in focus. In China, markets will be closed from Tuesday for the Chinese New Year, but PMIs will be released.

Last week, the Nikkei 225 was above its expected range. The upper price was above by ¥1,000 and the lower price was above by ¥420.

This week, the Nikkei 225 is expected to move between Bollinger Band +3σ (currently around JPY 40890) on the upside and Bollinger Band +1σ (currently around JPY 38750) on the downside.

If US long-term interest rates continue to fall this week, the Nikkei 225 is likely to continue its upward trend.

登録: 投稿 (Atom)