Outlook for the Nikkei average this week [17 August 2025]

 [Fundamental viewpoint]

In the US market last week, July's CPI was largely in line with market expectations, easing excessive concerns about inflation and further raising expectations for a rate cut by the Fed in September, causing stock indices to rise for the week.

Weekly change: NY Dow: +1.74%, NASDAQ: +0.81%, S&P 500: +0.94%.

                                                                                                 

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

The difference in the yield spread between the Japanese and U.S. markets is 3.13 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 24.1 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 2025 relative to the current price of the Nikkei 225 will be 3.13 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 40.1 Or, the Nikkei 225 will be around 97,800 yen.

As a result, the Japanese market is undervalued by about 54,420 yen in the medium to long term.

 

Fundamentally, the Japanese market is about 54,420 yen less attractive than the US market. Last week, the weakness of the Japanese market eased slightly.

 

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

②    As a result of the financial results announcement, the ROE forecast for Nikkei 225 stocks was +8.9%. This is a deterioration of 0.3 percentage points compared to three months ago. Profit growth was -6.4%. This is a deterioration of 4.1 percentage points compared to three months ago.

③    Although long-term interest rates in the United States rose, the interest rate differential between Japan and the United States narrowed from 2.80 to 2.76, and the dollar-yen exchange rate moved in the direction of yen appreciation, ranging from 148 yen to 146 yen. The dollar index fell -0.43% over 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 first week of August saw net selling, while the second week of August likely saw net buying, and net buying is expected this week. Last week, of the five points, ① was a bullish factor.

 

[Technical viewpoint]

From a technical perspective, the Japanese market is overvalued by 0.3 points in the medium to long term in terms of the difference in the 200-day divergence rate from the NASDAQ (about 130 yen when converted to the Nikkei 225). On the other hand, the difference in the 200-day divergence from the NYDow is overvalued by 8.5 point in the medium to long term (about 3690 yen when converted to the Nikkei 225).

 

The Japanese market is stronger than the NY Dow and NASDAQ. The VIX, an indicator of volatility in the US market, fell to 15.1 for the week. The Nikkei VI fell to 24.6 for the week. The US market is optimistic, while the Japanese market is in a state of ‘suspicion and distrust.’’’

 

The Nikkei 225 is above the 9-day line and the 25-day line. The short-term trend is now showing a “green signal.

The Nikkei 225 is above the Ichimoku Kinko's Kumo (equilibrium) cloud. The overall divergence was +30.1%, while the 200-day moving average divergence was +13.0%. As all three factors are positive, the medium-term trend has a "green light".

 

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

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

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

 

[Outlook for this week]

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

 

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

 

Analysis of the foreign exchange market 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 145 yen.

 

In the US market this week, Fed Chair Powell will deliver a speech at the Jackson Hole Symposium and may comment on the White House's request for interest rate cuts. In addition, the minutes of the previous FOMC meeting will also be closely watched. In terms of economic indicators, the housing price index, housing starts, and existing home sales will be announced. Globally, attention is likely to focus on the PMI for the eurozone, the UK, and Japan, price data for the UK and Japan, and China's interest rate decision..

 

Last week, the Nikkei Average remained within the expected range. The upper limit was 70 yen lower than expected, and the lower limit was 680 yen higher than expected.

This week, the Nikkei Average is expected to move between the upper limit of the Bollinger Band +3σ (currently around 44,340 yen) and the lower limit of the Bollinger Band +1σ (currently around 42,050 yen).          

This week, the Nikkei Average is expected to fluctuate around the rising Bollinger Band +2σ, and is likely to reach a new high.

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

 [Fundamental viewpoint]

Last week, the US market saw stock indices rise over the week on speculation that aggressive monetary easing would support the economy, based on expectations of a rate cut by the Federal Reserve in September.

Weekly change: NY Dow: +1.35%, NASDAQ: +3.87%, S&P 500: +2.43%.

                                                                                                 

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

The difference in the yield spread between the Japanese and U.S. markets is 3.34 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 23.8 and the Nikkei 225's P/E ratio of 17.1 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 3.34 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 39.9 Or, the Nikkei 225 will be around 97,500 yen.

As a result, the Japanese market is undervalued by about 55,680 yen in the medium to long term.

 

Fundamentally speaking, the Japanese market is about 55,680 yen less attractive than the US market. Last week, the weakness of the Japanese market expanded slightly.

 

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

②    As a result of the financial results announcement, the ROE forecast for Nikkei 225 constituent stocks was +8.9%. This is an improvement of +0.2 percentage points compared to three months ago. Profit growth was -6.1%. This is a deterioration of -5.6 percentage points compared to three months ago.

③    Long-term interest rates in the United States rose, widening the interest rate differential between Japan and the United States from 2.67 to 2.80, and the dollar-yen exchange rate moved in the direction of yen depreciation, ranging from 146 yen to 148 yen. The dollar index fell 0.41% over 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 July saw net selling, while the first week of August likely saw net buying, and net buying is expected this week. Last week, points ① and ③ were bullish factors out of the five points.

 

[Technical viewpoint]

From a technical perspective, the Japanese market 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 1250 yen when converted to the Nikkei 225). On the other hand, the difference in the 200-day divergence from the NYDow is overvalued by 6.3 point in the medium to long term (about 2630 yen when converted to the Nikkei 225).

 

The Japanese market is stronger than the NY Dow but weaker than the NASDAQ. The VIX, an indicator of volatility in the US market, fell to 15.2 for the week. The Nikkei VI rose to 24.7 for the week. The US market is optimistic, while the Japanese market is in a state of ‘suspicion and distrust.’’

 

The Nikkei 225 is above the 9-day line and the 25-day line. The short-term trend is now showing a “green signal.

The Nikkei 225 is above the Ichimoku Kinko's Kumo (equilibrium) cloud. The overall divergence was +21.0%, while the 200-day moving average divergence was +9.2%. As all three factors are positive, the medium-term trend has a "green light".

 

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

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

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

 

[Outlook for this week]

Looking at the US market from a fundamental perspective, 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 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 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 144 yen.

 

This week in the US market, attention will focus on whether there will be any progress toward a US-China agreement on tariffs by the August 12 deadline. In addition, attention will also focus on the meeting between President Trump and President Putin on the 15th to explore solutions to the Ukraine conflict. In the U.S., key economic indicators such as the Consumer Price Index (CPI), Producer Price Index (PPI), retail sales, industrial production, and the University of Michigan Consumer Sentiment Index (flash estimate) will be released. Globally, China's retail sales, as well as second-quarter GDP figures for the Eurozone, Japan, and the UK, will also be announced..

 

Last week, the Nikkei Average exceeded the expected range. The upper limit exceeded 1,650 yen, and the lower limit exceeded 960 yen.

This week, the Nikkei Average is expected to move between the upper limit of the Bollinger Band +3σ (currently around 42,590 yen) and the lower limit of the Bollinger Band +1σ (currently around 41,120 yen).

             

This week, the Nikkei Average is likely to challenge its all-time high. Technically, it is overbought, but if it can break through the all-time high, momentum will increase and further gains can be expected.

Outlook for the Nikkei average this week [3 August 2025]

 [Fundamental viewpoint]

Last week, the US market saw a decline in stock indices for the week as July's employment statistics led to concerns about an economic downturn.

Weekly change: NY Dow: -2.92%, NASDAQ: -2.17%, S&P 500: -2.36%.

                                                                                                 

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

The difference in the yield spread between the Japanese and U.S. markets is 3.46 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 23.8 and the Nikkei 225's P/E ratio of 16.4 the difference between the U.S. and Japanese interest rates, and the difference in GDP growth rates.

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

The difference in GDP growth between Japan and the U.S. in 2025 relative to the current price of the Nikkei 225 will be 3.46 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 38.1 Or, the Nikkei 225 will be around 94,480 yen.

As a result, the Japanese market is undervalued by about 53,680 yen in the medium to long term.

 

Fundamentally, the Japanese market can be said to be about 53,680 yen less attractive than the US market. Weakness in the Japanese market improved 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.2) The weekly leg of the NASDAQ was negative. The daily is above the 200-day line and above the clouds on the Ichimoku Chart. This week, the focus will be on whether the NY Dow can return above the 25-day line..

②    As a result of the earnings announcements, the expected ROE of the Nikkei 225 stocks was +9.0%, a deterioration of -0.2 percentage points compared to three months ago. Profit growth was -4.4%, a deterioration of -9.5 percentage points compared to three months ago.

③    Long-term interest rates in the United States declined, narrowing the interest rate differential between Japan and the United States from 2.89 to 2.79, and the dollar-yen exchange rate moved in the direction of yen appreciation, ranging from the 148 yen level to the 145 yen level. The dollar index fell 0.80% over 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 July saw net buying, and the first week of August is likely to have seen net buying as well, with net selling expected this week. Last week, of the five points, ① was bearish.

 

[Technical viewpoint]

From a technical perspective, the Japanese market is undervalued by 1.8 points in the medium to long term in terms of the difference in the 200-day divergence rate from the NASDAQ (about 720 yen when converted to the Nikkei 225). On the other hand, the difference in the 200-day divergence from the NYDow is overvalued by 4.9 point in the medium to long term (about 2000 yen when converted to the Nikkei 225).

 

The Japanese market is stronger than the NY Dow but weaker than the NASDAQ. The VIX, an indicator of volatility in the US market, rose to 20.4 for the week. The Nikkei VI rose to 23.3 for the week. Both the US and Japanese markets are in a state of ‘uncertainty.’

 

The Nikkei 225 is below the 9-day line and above the 25-day line. The short-term trend is now showing a “yellow signal.

The Nikkei 225 is above the Ichimoku Kinko's Kumo (equilibrium) cloud. The overall divergence was +14.6%, while the 200-day moving average divergence was +6.6%. As all three factors are positive, the medium-term trend has a "green light".

 

In the US market, the NY Dow is below the 9-day line and 25-day and above 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 above the Ichimoku Chart.

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

 

[Outlook for this week]

Looking at the US market from a fundamental perspective, 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 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 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 144 yen.

 

This week in the US market, investors will be closely watching trade negotiations between the US and its major trading partners as the August 1 deadline for tariff implementation approaches. Additionally, this week will see the most active earnings announcements from companies such as Microsoft, Apple, Amazon, and Meta. Furthermore, important monetary policy decisions by central banks such as the Federal Reserve and the Bank of Japan are also scheduled. On the data front, key releases include the preliminary second-quarter GDP figures, employment statistics, personal consumption expenditures (PCE), and the ISM Manufacturing Purchasing Managers' Index (PMI). Globally, attention will also focus on the GDP and inflation rate of the Eurozone, as well as China's PMI.

 

Last week, the Nikkei Average fell below the expected range. The upper limit fell 670 yen below the expected range, and the lower limit fell 290 yen below the expected range.

This week, the Nikkei Average is expected to move between the upper limit of the 25-day moving average (currently around 40,210 yen) and the lower limit of the Bollinger Band -2σ (currently around 38,880 yen).

             

This week, the Nikkei Average is likely to show signs of a change in its upward trend. From here on, attention is likely to focus on economic indicators that suggest the state of the US economy.

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

 [Fundamental viewpoint]

Last week, the US market saw stock indices rise on expectations that tariff negotiations between Japan and the US would reach an agreement and that trade negotiations with other major trading partners would move forward.

Weekly change: NY Dow: +1.26%, NASDAQ: +1.02%, S&P 500: +1.46%.

                                                                                                 

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

The difference in the yield spread between the Japanese and U.S. markets is 3.61 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 24.0.8and the Nikkei 225's P/E ratio of 16.5 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.

The difference in GDP growth between Japan and the U.S. in 2025 relative to the current price of the Nikkei 225 will be 3.61 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 40.5 Or, the Nikkei 225 will be around 101,950 yen.

As a result, the Japanese market is undervalued by about 60,490 yen in the medium to long term.

 

Fundamentally, the Japanese market can be said to be about 60,490 yen less attractive than the US market. Weakness in the Japanese market improved 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.2) The weekly leg of the NASDAQ was positive. The daily is above the 200-day line and above the clouds on the Ichimoku Chart. This week, the focus will be on whether the NY Dow can keep above the 25-day line..

②    As a result of the earnings announcements, the expected ROE of the Nikkei 225 stocks was +9.0%, a deterioration of -0.2 percentage points compared to three months ago. Profit growth was -4.1%, a deterioration of -11.4 percentage points compared to three months ago.

③    Long-term interest rates in the United States declined, narrowing the interest rate differential between Japan and the United States from 2.89 to 2.79, and the dollar-yen exchange rate moved in the direction of yen appreciation, ranging from the 148 yen level to the 145 yen level. The dollar index fell 0.80% over 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 third week of July saw net buying, and the fourth week of July is likely to have seen net buying as well, with net buying expected this week. Last week, of the five points, ① was the bullish factor.

 

[Technical viewpoint]

From a technical perspective, the Japanese market is undervalued by 2.7 points in the medium to long term in terms of the difference in the 200-day divergence rate from the NASDAQ (about 1120 yen when converted to the Nikkei 225). On the other hand, the difference in the 200-day divergence from the NYDow is overvalued by 3.7 point in the medium to long term (about 1530 yen when converted to the Nikkei 225).

 

The Japanese market is stronger than the NY Dow but weaker than the NASDAQ. The VIX, an indicator of volatility in the US market, fell to 14.9 for the week. The Nikkei VI fell to 22.2 for the week. The US market is optimistic, while the Japanese market is in a state of ‘suspicion and distrust.’

 

The Nikkei 225 is above the 9-day line and the 25-day line. The short-term trend is now showing a “green signal.

The Nikkei 225 is above the Ichimoku Kinko's Kumo (equilibrium) cloud. The overall divergence was +22.6%, while the 200-day moving average divergence was +8.5%. As all three factors are positive, the medium-term trend has a "green light".

 

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

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

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

 

[Outlook for this week]

Looking at the US market from a fundamental perspective, 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 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 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 148 and 145 yen.

 

This week in the US market, investors will be closely watching trade negotiations between the US and its major trading partners as the August 1 deadline for tariff implementation approaches. Additionally, this week will see the most active earnings announcements from companies such as Microsoft, Apple, Amazon, and Meta. Furthermore, important monetary policy decisions by central banks such as the Federal Reserve and the Bank of Japan are also scheduled. On the data front, key releases include the preliminary second-quarter GDP figures, employment statistics, personal consumption expenditures (PCE), and the ISM Manufacturing Purchasing Managers' Index (PMI). Globally, attention will also focus on the GDP and inflation rate of the Eurozone, as well as China's PMI.

 

Last week, the Nikkei Average exceeded the expected range. The upper limit exceeded 880 yen, and the lower limit exceeded 120 yen.

This week, the Nikkei Average is expected to move between the upper limit of the Bollinger Band +3σ (currently around 42,170 yen) and the lower limit of the Bollinger Band +1σ (currently around 40,590 yen).

             

This week, the Nikkei Average is expected to move within the Bollinger Band +2σ.

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

 [Fundamental viewpoint]

Stock indices were mixed on the week in the US markets last week, with high support from tech stocks amid continued concerns over the US high tariff policy.

Weekly volatility NY Dow: -0.07%, NASDAQ: +1.51%, S&P 500: +0.59%.

                                                                                                 

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

The difference in the yield spread between the Japanese and U.S. markets is 3.96 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 23.8and the Nikkei 225's P/E ratio of 15.7 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 3.96 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 41.3 Or, the Nikkei 225 will be around 104,930 yen.

As a result, the Japanese market is undervalued by about 65,110 yen in the medium to long term.

 

Fundamentally, the Japanese market can be said to be about 65,110 yen less attractive than the US market. Weakness in the Japanese market improved 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 in the crosshairs last week. The daily is above the 200-day line and above the clouds on the Ichimoku Chart.2) The weekly leg of the NASDAQ was positive. The daily is above the 200-day line and above the clouds on the Ichimoku Chart. This week, the focus will be on whether the NY Dow can keep above the 25-day line..

②    As a result of the earnings announcements, the expected ROE of the Nikkei 225 stocks was +9.1%, a deterioration of -0.1 percentage points compared to three months ago. Profit growth was -3.8%, a deterioration of -10.5 percentage points 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 2.90 to 2.89, but the dollar moved in a weaker direction against the yen in the range of ¥146 to ¥149. The Dollar Index rose +0.61% 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 second week of July was overbought, the third week of July was likely overbought and this week is expected to be overbought. Of the five points, ③ was bullish last week.

 

[Technical viewpoint]

From a technical perspective, the Japanese market is undervalued by 6.2 points in the medium to long term in terms of the difference in the 200-day divergence rate from the NASDAQ (about 2470 yen when converted to the Nikkei 225). On the other hand, the difference in the 200-day divergence from the NYDow is overvalued by 0.7 point in the medium to long term (about 270 yen when converted to the Nikkei 225).

 

The Japanese market is slightly stronger than the NY Dow and weaker than the NASDAQ. The VIX, a measure of US market volatility, was unchanged at 16.4 for the week. The Nikkei VI rose to 24.8 for the week. The US market is optimistic and the Japanese market is ‘skeptical’.

 

The Nikkei 225 is above the 9-day line and the 25-day line. The short-term trend is now showing a “green signal.

The Nikkei 225 is above the Ichimoku Kinko's Kumo (equilibrium) cloud. The overall divergence was +12.1%, while the 200-day moving average divergence was +4.3%. As all three factors are positive, the medium-term trend has a "green light".

 

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

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

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

 

[Outlook for this week]

Looking at the US market from a fundamental perspective, 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 up trend and a short-term no trend. The Japanese market is in a medium-term up trend, and the short-term is no 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.

 

The focus in the US markets this week will continue to be on whether and how a trade agreement is reached. The US earnings season is in full swing, with major companies such as Alphabet, Tesla, Verizon, Coca-Cola and IBM due to announce their quarterly results. Key US economic indicators of note will include the preliminary S&P Global PMI, durable goods orders, existing home sales and new home sales. Globally, the ECB's monetary policy decisions will be in focus. Markets will also see the release of economic indicators, including PMIs for the eurozone, Germany, Japan, India, the UK and France, the German and UK consumer confidence indices, the German Ifo business confidence index, UK retail sales and the Tokyo consumer price index (CPI). In addition, investors will be closely monitoring the results of the Japanese House of Councillors elections.

 

Last week, the Nikkei 225 remained within the expected range. The upper price was below ¥530 and the lower price was above ¥50.

This week, the Nikkei 225 is expected to move between the Bollinger Band +2σ (currently around JPY 40620) on the upside and the 25-day line (currently around JPY 39410) on the downside.

             

Again this week, whether or not the Nikkei 225 can remain above the 25-day line will be important in predicting the future.

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

 [Fundamental viewpoint]

Stock indices fell on the week in the US markets last week on renewed concerns that high US tariffs would depress the global economy.

Weekly change NY Dow: -1.02%, NASDAQ: -0.08%, S&P 500: -0.31%.

                                                                                                 

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

The difference in the yield spread between the Japanese and U.S. markets is 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 23.7and the Nikkei 225's P/E ratio of 15.6 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 4.02 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 41.4 Or, the Nikkei 225 will be around 105,330 yen.

As a result, the Japanese market is undervalued by about 65,760 yen in the medium to long term.

 

Fundamentally, the Japanese market can be said to be about 65,760 yen 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 negative last week. The daily is below the 200-day line and the clouds on the Ichimoku Chart. The weekly leg of the NASDAQ was positive. The daily is above the 200-day line and the clouds of the Ichimoku Chart. This week, the focus will be on whether the NY Dow can keep above the 25-day line..

②    As a result of the earnings announcements, the expected ROE of the Nikkei 225 stocks was +9.0%, a deterioration of -0.1 percentage points compared to three months ago. Profit growth was -3.4%, a deterioration of -10.6 percentage points compared to three months ago.

③    Long-term interest rates in the US rose and the interest rate differential between the two countries narrowed from 2.93 to 2.90, with the dollar moving towards a weaker yen in the range of ¥144 to ¥147. The Dollar Index rose +0.91% 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 first week of July was overbought, the second week of July was likely overbought and this week is expected to be overbought. Last week, of the five points, ① was bearish.

 

[Technical viewpoint]

From a technical perspective, the Japanese market is undervalued by 5.3 points in the medium to long term in terms of the difference in the 200-day divergence rate from the NASDAQ (about 2100 yen when converted to the Nikkei 225). On the other hand, the difference in the 200-day divergence from the NYDow is undervalued by 1.5 point in the medium to long term (about 590 yen when converted to the Nikkei 225).

 

Japanese markets are weaker than the NY Dow and NASDAQ. The VIX, a measure of US market volatility, fell to a weekly low of 16.4. The Nikkei VI fell to a weekly low of 22.9. The US market is optimistic and the Japanese market is ‘skeptical’.

 

The Nikkei 225 is below the 9-day line and above the 25-day line. The short-term trend is now showing a “yellow signal.

The Nikkei 225 is above the Ichimoku Kinko's Kumo (equilibrium) cloud. The overall divergence was +15.3%, while the 200-day moving average divergence was +4.7%. As all three factors are positive, the medium-term trend has a "green light".

 

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

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

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

 

[Outlook for this week]

Looking at the US market from a fundamental perspective, 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 up trend and a short-term no trend. The Japanese market is in a medium-term up trend, and the short-term is no 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 144 yen.

 

This week, the US market will focus on the impact of the US administration's tariff policy on the global growth outlook and corporate earnings. Economic indicators will include the US consumer price index and retail sales. Globally, the Eurozone trade balance and industrial production and China's GDP growth will be released.

 

Last week, the Nikkei 225 fell below its expected range. The upside was below ¥630 and the downside was below ¥350.

This week, the Nikkei 225 is expected to move between the Bollinger Band +2σ (currently around JPY 40610) on the upside and the 25-day line (currently around JPY 39090) on the downside.

             

Whether or not the Nikkei 225 can stay above the 25-day line this week is important for predicting the future.

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

 [Fundamental viewpoint]

In the US markets last week, stock indices rose sharply on the week as the June jobs report showed a larger-than-market-expected increase in the number of employees and the near-term tariff risk receded.

Weekly change NY Dow: +2.30%, NASDAQ: +1.62%, S&P 500: +1.72%.

                                                                                                 

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

The difference in the yield spread between the Japanese and U.S. markets is 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 23.2and the Nikkei 225's P/E ratio of 15.8 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 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 40.2 Or, the Nikkei 225 will be around 101,420 yen.

As a result, the Japanese market is undervalued by about 61,610 yen in the medium to long term.

 

Fundamentally, the Japanese market can be said to be about 61,610 yen 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 the clouds on the Ichimoku Chart. The weekly leg of the NASDAQ was positive. The daily is above the 200-day line and the clouds of the Ichimoku Chart. This week, the focus will be on whether the NY Dow can keep above the 200-day line..

②    As a result of the earnings announcements, the expected ROE of the Nikkei 225 stocks was +9.0%, a deterioration of -0.1 percentage points compared to three months ago. Profit growth was -3.3%, a deterioration of -9.7 percentage points compared to three months ago.

③    Long-term interest rates in the US rose and the interest rate differential between the US and Japan widened from 2.85 to 2.93, causing the dollar to move against the yen in the range of ¥142 to ¥145. The Dollar Index fell -0.28% 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 June was overbought, the first week of July was likely overbought and this week is expected to be overbought. Of the five points, ① and ⑤ were bullish last week.

 

[Technical viewpoint]

From a technical perspective, the Japanese market is undervalued by 5.0 points in the medium to long term in terms of the difference in the 200-day divergence rate from the NASDAQ (about 1990 yen when converted to the Nikkei 225). On the other hand, the difference in the 200-day divergence from the NYDow is undervalued by 0.3 point in the medium to long term (about 120 yen when converted to the Nikkei 225).

 

The Japanese market is stronger than the NY Dow but weaker than the NASDAQ. The VIX, an indicator of US market volatility, rose to 17.5 for the week. The Nikkei VI rose to 26.7 for the week. The US market is optimistic and the Japanese market is ‘skeptical..

 

The Nikkei 225 is above the 9-day line but the 25-day line. The short-term trend is now showing a “green signal.

The Nikkei 225 is above the Ichimoku Kinko's Kumo (equilibrium) cloud. The overall divergence was +15.3%, while the 200-day moving average divergence was +4.7%. As all three factors are positive, the medium-term trend also has a "green light".

 

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

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

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

 

[Outlook for this week]

Looking at the US market from a fundamental perspective, 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 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 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 143 and 146 yen.

 

This week, US markets will be most interested in developments in US tariff policy as the 9 July deadline for the end of the tariff moratorium approaches. Also of interest will be the release of the FOMC minutes to find out the Fed's policy direction for the year. Globally, China's consumer and producer prices, the UK's monthly GDP and Germany's industrial production and trade statistics will be released.

 

Last week, the Nikkei 225 moved mostly within the expected range. The upper price was above 190 yen and the lower price was above 60 yen.

This week, the Nikkei 225 is expected to move between Bollinger Band +2σ (currently around JPY 40460) on the upside and Bollinger Band +1σ (currently around JPY 39570) on the downside.

             

Whether or not the Nikkei 225 can stay above the Bollinger Band +1σ this week is important for predicting the future.