Outlook for the Nikkei average this week [8 November 2026]

 [Fundamental viewpoint]

In the U.S. market last week, the Democratic Party’s strong performance in the midterm elections fueled concerns over potential stricter regulations on data center construction. This triggered a sell-off across a broad range of stocks—including those in the AI ​​sector—leading to a decline in major stock indices for the week.

 

Weekly performance: Dow Jones: -0.94%, NASDAQ: -3.37%, S&P 500: -2.68%

 

On the other hand, medium- to long-term risks include concerns over military conflicts in the Middle East and the protracted conflict in Ukraine; financial instability caused by inflation and rising interest rates driven by high crude oil prices, along with concerns about a global economic slowdown; and concerns over a real estate bubble burst and an economic slowdown in China. Furthermore, these factors have raised concerns about the onset of stagflation. In addition, continued vigilance is required regarding geopolitical risks in Latin America and East Asia..

Considering the OECD’s nominal GDP forecasts for 2026, the yield spread between the Japanese and U.S. markets indicates that the Japanese market is undervalued by 0.79 points. This undervaluation stems from the difference between the S&P 500’s P/E ratio of 19.0 and the projected P/E ratio of 14.9 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 0.79 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 16.8. Or, the Nikkei 225 must reach approximately 65,110 yen.

Consequently, the Japanese market is undervalued by about 7,680 yen in the medium to long term.

From a fundamental perspective, one could say that the Japanese market is less attractive than the U.S. market. Last week, the Japanese market was performing weaker than the U.S. market.

 

[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 chart for the NY Dow closed with a bearish candle last week. On the daily chart, the index remains above the 200-day moving average but below the "cloud" of the Ichimoku Kinko Hyo indicator. The weekly chart for the NASDAQ also closed with a bearish candle; on its daily chart, the index is likewise positioned below the 200-day moving average and the Ichimoku cloud. This week, the focus will be on whether the Dow can climb back above its 25-day moving average.

②    Following the release of earnings results, the projected ROE for Nikkei 225 constituent stocks stood at +11.5%. This represents an improvement of +0.7 percentage points compared to three months ago. The profit growth rate was +23.3%, marking an improvement of +7.4 percentage points compared to three months ago.

③    Although long-term interest rates in the U.S. declined, the interest rate differential between Japan and the U.S. widened from 2.17 to 2.24; the USD/JPY pair moved from the 157-yen range to the 158-yen range, reflecting a trend toward a weaker yen. The U.S. Dollar Index rose by 0.31% over 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    There was a net sell position for the fourth week of October. It is highly likely that the first week of November also saw a net sell position, and a net sell position is expected for this week. Last week, point ① among the five factors served as a bearish indicator.

 

[Technical viewpoint]

From a technical perspective, the Japanese market appears undervalued in the medium to long term. Based on the difference in the 200-day moving average deviation rate compared to the NASDAQ, it is undervalued by 5.1 percentage points (equivalent to approximately 2,930 yen on the Nikkei Stock Average). Meanwhile, based on the difference in the 200-day moving average deviation rate compared to the Dow Jones Industrial Average, it is undervalued by 8.4 percentage points (equivalent to approximately 4,820 yen on the Nikkei Stock Average).

 

The Japanese market is currently weaker than the Dow Jones Industrial Average and the NASDAQ. The VIX—an indicator of volatility in the U.S. market—rose to 25.6 for the week, while the Nikkei VI climbed to 44.6. Both the U.S. and Japanese markets are in a state of "extreme fear."

 

The Nikkei Stock Average is positioned below both its 9-day and 25-day moving averages, signaling a "red light" for the short-term trend.

Furthermore, the Nikkei is trading below the "cloud" (kumo) of the Ichimoku Kinko Hyo indicator. The composite deviation rate stands at -31.5%, while the deviation from the 200-day moving average is -7.3%. With these three factors all in negative territory, a "red light" is signaled for the medium-term trend.

 

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

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

The U.S. market is showing a “red 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 no trend and a short-term down trend. The Japanese market is in a medium-term no trend, and the short-term is down trend.

 

An analysis of the foreign exchange market shows that the yen has begun to strengthen, peaking at 163 yen in July 2026. This week, the exchange rate is expected to range from the 157-yen level to the 159-yen level.

 

The primary focus in the U.S. market this week is whether the outflow of funds from high-tech stocks will continue. Regarding economic indicators, the release of the Consumer Price Index (CPI) and the Producer Price Index (PPI) will be closely watched for insights into the Federal Reserve’s interest rate outlook. On a global scale, key data to watch include China’s inflation and trade statistics, Japan’s Producer Price Index (PPI), and the United Kingdom’s trade figures and GDP data.

 

Last week, the Nikkei Stock Average fell significantly below the projected range—ending about 2,350 points below the upper limit and approximately 2,010 points below the lower limit.

For this week, the Nikkei is expected to trade within a range defined by the -1σ Bollinger Band (currently around 62,010) as the upper limit and the -3σ Bollinger Band (currently at 55,500) as the lower limit.

 

At the start of this week, we may see some buying back of oversold data center (DC)-related stocks; however, the index is likely to continue moving along the downward-sloping -2σ Bollinger Band thereafter.

Outlook for the Nikkei average this week [1 November 2026]

 [Fundamental viewpoint]

In the U.S. market last week, growing uncertainty regarding the monetization and sustainability of AI investments led to a decline in stock indices.

Weekly performance: Dow Jones -0.85%, NASDAQ -2.00%, S&P 500 -0.57%

 

On the other hand, medium- to long-term risks include concerns over military conflicts in the Middle East and the protracted conflict in Ukraine; financial instability caused by inflation and rising interest rates driven by high crude oil prices, along with concerns about a global economic slowdown; and concerns over a real estate bubble burst and an economic slowdown in China. Furthermore, these factors have raised concerns about the onset of stagflation. In addition, continued vigilance is required regarding geopolitical risks in Latin America and East Asia..

Considering the OECD’s nominal GDP forecasts for 2026, the yield spread between the Japanese and U.S. markets indicates that the Japanese market is undervalued by 0.16 points. This undervaluation stems from the difference between the S&P 500’s P/E ratio of 19.3 and the projected P/E ratio of 16.4 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 0.16 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 16.9. Or, the Nikkei 225 must reach approximately 65,000 yen.

Consequently, the Japanese market is undervalued by about 1,710 yen in the medium to long term.

From a fundamental perspective, one could say that the Japanese market is slightly less attractive than the U.S. market. Last week, the Japanese market was performing slightly weaker than the U.S. market.

 

[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 chart for the NY Dow closed with a bearish candle last week. On the daily chart, the index remains above the 200-day moving average but below the "cloud" of the Ichimoku Kinko Hyo indicator. The weekly chart for the NASDAQ also closed with a bearish candle; on its daily chart, the index is likewise positioned above the 200-day moving average but below the Ichimoku cloud. This week, the focus will be on whether the Dow can climb back above its 25-day moving average.

②    Following the release of earnings results, the projected ROE for Nikkei 225 constituent stocks stood at +11.0%. This represents an improvement of +0.4 percentage points compared to three months ago. The profit growth rate was +17.8%, marking an improvement of +5.1 percentage points compared to three months ago.

③    Although U.S. long-term interest rates declined and the interest rate differential between the U.S. and Japan narrowed from 2.21 to 2.17, the USD/JPY pair moved toward a weaker yen, shifting from the 156 yen range to the 158 yen range. The U.S. Dollar Index rose by 0.21% over 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    There was a net buying position for the third week of October. It is highly likely that the fourth week of October also saw net buying, while a net selling position is expected for this week. Last week, points ① and ③—out of the five—served as bullish factors.

 

[Technical viewpoint]

From a technical perspective, the Japanese market appears overvalued in the medium to long term: by 1.1 percentage points (equivalent to approximately 700 yen on the Nikkei Stock Average) when compared to the NASDAQ based on the divergence from the 200-day moving average, and by 0.2 percentage points (equivalent to approximately 130 yen on the Nikkei Stock Average) when compared to the Dow Jones Industrial Average on the same basis.

 

The Japanese market is currently showing slightly more weakness than the Dow Jones Industrial Average and the NASDAQ. The VIX—an indicator of volatility in the U.S. market—remained flat for the week at 19.4, while the Nikkei VI declined to 33.8. The U.S. market is in a state of "fear," whereas the Japanese market is in a state of "extreme fear."

 

The Nikkei 225 is trading below both its 9-day and 25-day moving averages. A “red light” is flashing for the short-term trend.

The Nikkei 225 is trading below the “Cloud” in the Ichimoku Kinko Hyo chart. The overall deviation rate stands at -5.6%, while the deviation from the 200-day moving average is +2.4%. Since both factors are negative, a “yellow light” is flashing for the medium-term trend.

 

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

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

The U.S. market is showing a “red 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 no trend and a short-term down trend. The Japanese market is in a medium-term no trend, and the short-term is down trend.

 

An analysis of the foreign exchange market shows that the yen has begun to strengthen, peaking at 163 yen in July 2026. This week, the exchange rate is expected to range from the 156-yen level to the 158-yen level.

 

In the U.S. market this week, attention will be focused on the midterm elections. Geopolitical developments concerning the Middle East and Ukraine will also remain a key area of ​​interest. Major companies, including Apple, Palantir, AMD, McDonald’s, Qualcomm, and Uber, are scheduled to report their earnings. Among economic indicators, the employment report will be the primary focus; other releases will include the ISM manufacturing and non-manufacturing PMIs, JOLTS job openings, factory orders, trade statistics, and the preliminary University of Michigan Consumer Sentiment Index. On a global level, China’s PMIs and inflation data from the Eurozone will also be closely watched..

 

Last week, the Nikkei Stock Average moved within the anticipated range; it remained about 1,350 points below the upper bound and about 700 points above the lower bound.

For this week, the Nikkei is expected to trade within a range defined by the 25-day moving average (currently around 66,090 yen) as the upper limit and the -2σ Bollinger Band (currently 61,050 yen) as the lower limit.

 

This week will be a crucial test for the Nikkei average, as it will need to see if it can rebound without falling significantly below the -2σ Bollinger Band.

Outlook for the Nikkei average this week [25 October 2026]

 [Fundamental viewpoint]

In the U.S. markets last week, while selling pressure continued in some semiconductor and AI infrastructure stocks, investors continued to shift funds into defensive and cyclical stocks, resulting in mixed weekly performance for the major stock indices.

Weekly percentage change: Dow Jones: +0.41%, NASDAQ: -0.71%, S&P 500: -0.47%

 

On the other hand, medium- to long-term risks include concerns over military conflicts in the Middle East and the protracted conflict in Ukraine; financial instability caused by inflation and rising interest rates driven by high crude oil prices, along with concerns about a global economic slowdown; and concerns over a real estate bubble burst and an economic slowdown in China. Furthermore, these factors have raised concerns about the onset of stagflation. In addition, continued vigilance is required regarding geopolitical risks in Latin America and East Asia..

Considering the OECD’s nominal GDP forecasts for 2026, the yield spread between the Japanese and U.S. markets indicates that the Japanese market is undervalued by 0.07 points. This undervaluation stems from the difference between the S&P 500’s P/E ratio of 19.2 and the projected P/E ratio of 16.7 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 0.07 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 16.9. Or, the Nikkei 225 must reach approximately 63,410 yen.

Consequently, the Japanese market is undervalued by about 720 yen in the medium to long term.

From a fundamental perspective, one could say that the Japanese market is slightly less attractive than the U.S. market. Last week, the Japanese market was performing slightly weaker than the U.S. market.

 

[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 under 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 +10.9%. This represents an improvement of +0.4 percentage points compared to three months ago. The profit growth rate was +17.1%, marking an improvement of +4.7 percentage points compared to three months ago.

③    Long-term U.S. interest rates fell, narrowing the interest rate differential between Japan and the U.S. from 2.24 to 2.15. As a result, the dollar-yen exchange rate moved from the 158-yen range to the 157-yen range, reflecting a strengthening of the yen. The Dollar Index fell 0.44% 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.

Net selling occurred in the second week of October. It is highly likely that net selling also occurred in the third week of October, and net selling is expected this week. Last week, out of the five factors, points ① and ③ were bearish.

 

[Technical viewpoint]

From a technical perspective, the Japanese market is undervalued by 1.7 percentage points (equivalent to about 1,070 yen for the Nikkei 225) relative to the NASDAQ based on the 200-day moving average deviation. Meanwhile, it is undervalued by 1.3 percentage points (equivalent to about 820 yen for the Nikkei 225) relative to the NY Dow based on the 200-day moving average deviation.

 

The Japanese market is in a slightly weaker state than the Dow Jones Industrial Average and the NASDAQ. The VIX, an indicator of volatility in the U.S. market, fell to 19.4 for the week. The Nikkei VI rose to 38.3 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 225 is trading below both its 9-day and 25-day moving averages. A “red light” is flashing for the short-term trend.

The Nikkei 225 is trading below the “Cloud” in the Ichimoku Kinko Hyo chart. The overall deviation rate stands at -8.6%, while the deviation from the 200-day moving average is +2.0%. Since both factors are negative, a “yellow light” is flashing for the medium-term trend.

 

In the US market, the NY Dow is above the 9-day line and 25-day and 200-day lines. It is under 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.

The U.S. market is showing 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 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.

 

An analysis of the foreign exchange market shows that the yen has begun to strengthen, peaking at 163 yen in July 2026. This week, the exchange rate is expected to range from the 155-yen level to the 157-yen level.

 

In the U.S. market this week, investors will be monitoring the situation in the Middle East to see whether it might lead to further disruptions in oil supplies. Major technology companies—including Microsoft, Alphabet, and Amazon—are also set to report their earnings. Monetary policy will be another key focus, with the Federal Reserve, the European Central Bank, and the Bank of Japan all scheduled to make decisions on their respective policy interest rates. On the economic data front, the preliminary GDP figures for the July–September quarter and the September PCE deflator are due for release. Globally, the Eurozone’s preliminary GDP, inflation data from major European economies (such as Germany), and inflation figures for Japan are also expected to be announced.

 

Last week, the Nikkei Stock Average moved largely within the anticipated range; it fell short of the upper bound by approximately 950 points and the lower bound by about 140 points.

For this week, the Nikkei is expected to fluctuate between the 25-day moving average (currently around 66,280 yen) as the upper limit and the -2σ Bollinger Band (currently 61,660 yen) as the lower limit.

 

While a short-term rebound is possible, there is also a scenario in which the index remains weak—particularly if unauthorized access incidents targeting financial institutions and other companies continue to spread.

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

 [Fundamental viewpoint]

In the U.S. markets last week, while selling pressure continued in some semiconductor and AI infrastructure stocks, a rotation toward other stocks perceived as undervalued gained momentum, resulting in mixed weekly performance for the major stock indices.

 

Weekly percentage change: Dow Jones: +0.67%, NASDAQ: -4.48%, S&P 500: -1.95%

 

On the other hand, medium- to long-term risks include concerns over military conflicts in the Middle East and the protracted conflict in Ukraine; financial instability caused by inflation and rising interest rates driven by high crude oil prices, along with concerns about a global economic slowdown; and concerns over a real estate bubble burst and an economic slowdown in China. Furthermore, these factors have raised concerns about the onset of stagflation. In addition, continued vigilance is required regarding geopolitical risks in Latin America and East Asia..

Considering the OECD’s nominal GDP forecasts for 2026, the yield spread between the Japanese and U.S. markets indicates that the Japanese market is overvalued by 0.07 percentage points. This overvaluation stems from the difference between the S&P 500’s P/E ratio of 19.3 and the projected P/E ratio of 17.0 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 condition 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 widen by 0.07 percentage points relative to the OECD forecast (either Japan’s forecast must be revised downward or the U.S.’s must be revised upward). Alternatively, the projected P/E ratio for the current fiscal year for Nikkei 225 constituent stocks must reach approximately 16.8. Or, the Nikkei 225 must reach approximately 65,320 yen.

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

From a fundamental perspective, the Japanese market could be considered slightly more attractive than the U.S. market. Last week, the Japanese market was performing slightly better than the U.S. market..

.

 [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 under 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 +10.9%. This represents an improvement of +0.4 percentage points compared to three months ago. The profit growth rate was +17.2%, marking an improvement of +5.2 percentage points compared to three months ago.

③    Long-term U.S. interest rates fell, narrowing the interest rate differential between Japan and the U.S. from 2.24 to 2.15. As a result, the dollar-yen exchange rate moved from the 158-yen range to the 157-yen range, reflecting a strengthening of the yen. The Dollar Index fell 0.44% 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    Net buying was recorded in the first week of October. It is highly likely that net selling occurred in the second week of October, and net selling is expected this week. Last week, out of the five factors, ① and ③ were bearish.

 

[Technical viewpoint]

From a technical perspective, the Japanese market is overvalued by 2.2 percentage points (equivalent to approximately 1,440 yen for the Nikkei 225) relative to the NASDAQ based on the 200-day moving average deviation. Meanwhile, it is overvalued by 3.9 percentage points (equivalent to approximately 2,550 yen for the Nikkei 225) relative to the Dow Jones Industrial Average 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 20.0 for the week. The Nikkei VI rose to 32.2 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 225 is trading below both the 9-day and 25-day moving averages. The short-term trend is showing a “red light.”

The Nikkei 225 is trading below the Ichimoku Cloud. The overall deviation rate stands at +3.4%, while the deviation from the 200-day moving average is +6.9%. With all two factors indicating a positive outlook, the medium-term trend is showing a “yellow light.”

 

In the US market, the NY Dow is above the 9-day line and 25-day and 200-day lines. It is under 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.

The U.S. market is showing 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 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.

 

An analysis of the foreign exchange market shows that the yen has begun to strengthen, peaking at 163 yen in July 2026. This week, the exchange rate is expected to range from the 156-yen level to the 158-yen level.

 

In the U.S. markets this week, attention will continue to focus on the developments in the U.S.-Iran standoff. In addition, earnings reports from companies such as Meta, Tesla, P&G, Netflix, GE Aerospace, and SAP are likely to influence the market. On the economic front, housing-related indicators and PMI data will be released. Globally, the Eurozone PMI, Germany’s economic sentiment index, China’s third-quarter GDP growth rate, and Japan’s inflation rate and trade statistics are scheduled to be released.

 

Last week, the Nikkei 225 closed below the expected range. The high was about 2,020 yen below the upper limit, and the low was about 2,390 yen below the lower limit.

This week, the Nikkei 225 is expected to trade within a range defined by the 25-day moving average (currently around 66,440 yen) on the upside and the -2σ Bollinger Band (currently 62,080 yen) on the downside.

 

If concerns about the profitability of AI infrastructure investments persist in the U.S. markets, the Nikkei 225 is likely to trade weakly this week.

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

 [Fundamental viewpoint]

In the U.S. markets last week, as expectations of an early interest rate hike subsided and long-term interest rates fell, leading to a rebound in major stocks, stock indices rose for the week.

 

Weekly percentage change: Dow Jones: +0.93%, NASDAQ: +0.64%, S&P 500: +1.15%

 

On the other hand, medium- to long-term risks include concerns over military conflicts in the Middle East and the protracted conflict in Ukraine; financial instability caused by inflation and rising interest rates driven by high crude oil prices, along with concerns about a global economic slowdown; and concerns over a real estate bubble burst and an economic slowdown in China. Furthermore, these factors have raised concerns about the onset of stagflation. In addition, continued vigilance is required regarding geopolitical risks in Latin America and East Asia..

Considering the OECD’s nominal GDP forecasts for 2026, the yield spread between the Japanese and U.S. markets indicates that the Japanese market is overvalued by 0.01 percentage points. This overvaluation stems from the difference between the S&P 500’s P/E ratio of 19.6 and the projected P/E ratio of 17.4 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 condition 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 widen by 0.01 percentage points relative to the OECD forecast (either Japan’s forecast must be revised downward or the U.S.’s must be revised upward). 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 68,940 yen.

Consequently, the Japanese market is overvalued by about 100 yen in the medium to long term.

From a fundamental perspective, the Japanese market could be considered slightly more attractive than the U.S. market. Last week, the Japanese and U.S. markets were roughly in balance...

.

 [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 under 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 return above the 25-day line.

②    Following the release of earnings results, the projected ROE for Nikkei 225 constituent stocks stood at +10.9%. This represents an improvement of +0.4 percentage points compared to three months ago. The profit growth rate was +16.9%, marking an improvement of +5.7 percentage points compared to three months ago.

③    Although long-term U.S. interest rates fell, the interest rate differential between Japan and the U.S. widened from 2.19 to 2.24, and the dollar-yen exchange rate moved in a direction of yen weakness, ranging from the 157-yen level to the 158-yen level. The Dollar Index rose 0.30% 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    Net buying was recorded in the fifth week of September. It is highly likely that net buying also occurred in the first week of October, and net buying is expected this week. Last week, out of the five factors, ① and ③ were bullish.

 

[Technical viewpoint]

From a technical perspective, the Japanese market is overvalued by 3.6 percentage points (equivalent to approximately 2,490 yen for the Nikkei 225) relative to the NASDAQ based on the 200-day moving average deviation. Meanwhile, it is overvalued by 11.1 percentage points (equivalent to approximately 7,660 yen for the Nikkei 225) relative to the Dow Jones Industrial Average 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 14.9 for the week. The Nikkei VI rose to 30.1 for the week. The U.S. market is in a state of “optimism,” while the Japanese market is in a state of “fear.”

 

The Nikkei 225 is trading above both the 9-day and 25-day moving averages. The short-term trend is showing a “green light.”

The Nikkei 225 is trading above the Ichimoku Cloud. The overall deviation rate stands at +21.2%, while the deviation from the 200-day moving average is +13.6%. With all three factors indicating a positive outlook, the medium-term trend is showing a “green light.”

 

In the US market, the NY Dow is above the 9-day line and below 25-day and above 200-day lines. It is under 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 “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 no trend and a short-term no trend. The Japanese market is in a medium-term up trend, and the short-term is up trend.

 

An analysis of the foreign exchange market shows that the yen has begun to strengthen, peaking at 163 yen in July 2026. This week, the exchange rate is expected to range from the 157-yen level to the 159-yen level.

 

In the U.S. markets this week, attention will continue to focus on the outcome of the tensions between the U.S. and Iran. In addition, earnings reports from companies such as TSMC, ASML, JPMorgan Chase, Bank of America, Citigroup, J&J, and UnitedHealth are likely to influence the market. In terms of economic indicators, the CPI, PPI, retail sales, and industrial production figures are scheduled to be released. Globally, the eurozone’s industrial production and trade statistics, China’s trade balance and CPI, and Japan’s PPI and machinery orders are set to be announced.

 

Last week, the Nikkei 225 fell below the projected range. The high was about 360 yen below the upper limit, and the low was about 270 yen below the lower limit.

This week, the Nikkei 225 is expected to trade within a range defined by the upper limit at the +2σ Bollinger Band (currently around 70,620 yen) and the lower limit at the 25-day moving average (currently 66,230 yen)..

 

This week, the Nikkei 225 is likely to move along the rising +1σ line of the Bollinger Bands, provided that U.S. long-term interest rates continue to decline and U.S. companies continue to report strong earnings.

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

 [Fundamental viewpoint]

In the U.S. markets last week, long-term interest rates rose due to higher crude oil prices amid uncertainty surrounding the situation in Iran. However, as the weekend approached, the employment report came in below market expectations, dampening expectations of an early rate hike, and stock indices posted mixed results for the week.

 

Weekly percentage change: Dow Jones: -1.26%, NASDAQ: +0.45%, S&P 500: -0.27%

 

On the other hand, medium- to long-term risks include concerns over military conflicts in the Middle East and the protracted conflict in Ukraine; financial instability caused by inflation and rising interest rates driven by high crude oil prices, along with concerns about a global economic slowdown; and concerns over a real estate bubble burst and an economic slowdown in China. Furthermore, these factors have raised concerns about the onset of stagflation. In addition, continued vigilance is required regarding geopolitical risks in Latin America and East Asia..

Considering the OECD’s nominal GDP forecasts for 2026, the yield spread between the Japanese and U.S. markets indicates that the Japanese market is overvalued by 0.01 percentage points. This overvaluation stems from the difference between the S&P 500’s P/E ratio of 19.8 and the projected P/E ratio of 17.4 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 condition 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 widen by 0.01 percentage points relative to the OECD forecast (either Japan’s forecast must be revised downward or the U.S.’s must be revised upward). Alternatively, the projected P/E ratio for the current fiscal year for Nikkei 225 constituent stocks must reach approximately 17.4. Or, the Nikkei 225 must reach approximately 68,310 yen.

Consequently, the Japanese market is overvalued by about 100 yen in the medium to long term.

From a fundamental perspective, the Japanese market could be considered slightly more attractive than the U.S. market. Last week, the Japanese and U.S. markets were roughly in balance...

.

 [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 under 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 return above the 25-day line.

②    Following the release of earnings results, the projected ROE for Nikkei 225 constituent stocks stood at +10.9%. This represents an improvement of +0.4 percentage points compared to three months ago. The profit growth rate was +17.4%, marking an improvement of +5.8 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 2.11 to 2.19. The dollar-yen exchange rate moved in the direction of yen weakness, ranging from the 156-yen level to the 158-yen level. The Dollar Index rose 0.88% 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 there was a net sell position in the fourth week of September and a net buy position in the fifth week of September, and a net buy position is expected this week. Last week, out of the five factors, ① and ③ were bullish..

 

[Technical viewpoint]

From a technical perspective, the Japanese market is overvalued by 3.6 percentage points (equivalent to approximately 2,460 yen for the Nikkei 225) relative to the NASDAQ based on the 200-day moving average deviation. Meanwhile, it is overvalued by 11.6 percentage points (equivalent to approximately 7,920 yen for the Nikkei 225) relative to the Dow Jones Industrial Average 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 15.3 for the week. The Nikkei VI rose to 22.6 for the week. The U.S. market is in a state of “optimism,” while the Japanese market is in a state of “slight fear.”

 

The Nikkei 225 is trading above both the 9-day and 25-day moving averages. The short-term trend is showing a “green light.”

The Nikkei 225 is trading above the Ichimoku Cloud. The overall deviation rate stands at +19.8%, while the deviation from the 200-day moving average is +13.3%. With all three factors indicating a positive outlook, the medium-term trend is showing 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 under 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 “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 no trend and a short-term no trend. The Japanese market is in a medium-term up trend, and the short-term is up trend.

 

An analysis of the foreign exchange market shows that the yen has begun to strengthen, peaking at 163 yen in July 2026. This week, the exchange rate is expected to range from the 157-yen level to the 159-yen level.

 

In the U.S. markets this week, attention will continue to focus on the developments in the U.S.-Iran standoff. On the economic front, the FOMC minutes, the ISM Services PMI, and the University of Michigan Consumer Sentiment Index are scheduled for release. Globally, Germany’s manufacturing orders and trade statistics, the Eurozone’s Producer Price Index (PPI), Japan’s Consumer Confidence Index, and machine tool orders are scheduled for release. In addition, developments surrounding the OPEC meeting and the Brazilian presidential election are likely to remain key events for global markets..

 

Last week, the Nikkei 225 fluctuated both above and below the expected range. It rose about 1,140 yen above the upper limit and fell about 570 yen below the lower limit.

This week, the Nikkei 225 is expected to move within a range defined by the upper limit at the +3σ Bollinger Band (currently around 69,530 yen) and the lower limit at the +1σ Bollinger Band (currently 66,870 yen).

 

Depending on developments in Iran, the Nikkei 225 is likely to trade along the rising +2σ Bollinger Band this week.

Outlook for the Nikkei average this week [27 September 2026]

 [Fundamental viewpoint]

In the U.S. markets last week, crude oil futures fell on expectations that the situation in Iran was improving, and stock indices ended the week mixed.

Weekly percentage change: Dow Jones: +0.28%, NASDAQ: +2.06%, S&P 500: +1.21%

 

On the other hand, medium- to long-term risks include concerns over military conflicts in the Middle East and the protracted conflict in Ukraine; financial instability caused by inflation and rising interest rates driven by high crude oil prices, along with concerns about a global economic slowdown; and concerns over a real estate bubble burst and an economic slowdown in China. Furthermore, these factors have raised concerns about the onset of stagflation. In addition, continued vigilance is required regarding geopolitical risks in Latin America and East Asia..

Considering the OECD’s nominal GDP forecasts for 2026, the yield spread between the Japanese and U.S. markets indicates that the Japanese market is overvalued by 0.04 points. This overvaluation stems from the difference between the S&P 500’s P/E ratio of 19.9 and the projected P/E ratio of 17.3 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 widen by 0.04 percentage points relative to the OECD forecast (either Japan’s forecast must be revised downward or the U.S.’s must be revised upward). Alternatively, the projected P/E ratio for the current fiscal year for Nikkei 225 constituent stocks must reach approximately 17.2. Or, the Nikkei 225 must reach approximately 65,920 yen.

Consequently, the Japanese market is overvalued by about 440 yen in the medium to long term.

From a fundamental perspective, the Japanese market could be considered slightly more attractive than the U.S. market. Last week, the Japanese market shifted into overvalued territory..

.

 [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 under 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 return above the 25-day line.

②    Following the release of earnings results, the projected ROE for Nikkei 225 constituent stocks stood at +11.0%. This represents an improvement of +0.3 percentage points compared to three months ago. The profit growth rate was +17.9%, marking an improvement of +8.4 percentage points compared to three months ago.

③    Although U.S. long-term interest rates rose and the interest rate differential between Japan and the U.S. widened from 2.05 to 2.11, the dollar-yen exchange rate moved in the direction of yen weakness, ranging from the 156-yen level to the 159-yen level. The Dollar Index rose 0.82% 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 there was a net buying position in the third and fourth weeks of September, and a net buying position is expected this week. Last week, out of the five points, points ① and ③ were bullish factors.

 

[Technical viewpoint]

From a technical perspective, the Japanese market is overvalued by 1.2 percentage points (equivalent to about 800 yen for the Nikkei 225) relative to the NASDAQ based on the 200-day moving average deviation ratio over the medium to long term. Meanwhile, the Japanese market is overvalued by 7.7 percentage points (equivalent to about 5,110 yen for the Nikkei 225) relative to the NY Dow based on the 200-day moving average deviation ratio over the medium to long term.

 

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 14.9 for the week. The Nikkei VI fell to 20.3 for the week. The U.S. market is in an “optimistic” state, while the Japanese market is in a “slightly fearful” state.

The Nikkei 225 is trading above both its 9-day and 25-day moving averages. A “green light” is flashing for the short-term trend.

The Nikkei 225 is trading within the “Cloud” in the Ichimoku Kinko Hyo chart. The overall deviation rate stands at +12.1%, while the deviation rate from the 200-day moving average is +10.8%. Since both factors are positive, a “yellow light” is flashing for the medium-term trend.

 

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

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

The U.S. market is showing 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 no trend and a short-term no trend. The Japanese market is in a medium-term no trend, and the short-term is up trend.

 

An analysis of the foreign exchange market shows that the yen has begun to strengthen, peaking at 163 yen in July 2026. This week, the exchange rate is expected to range from the 158-yen level to the 155-yen level.

 

In the U.S. markets this week, attention will be focused on the outcome of the diplomatic agreement between the U.S., Iran, and the GCC countries. On the economic front, the spotlight will be on the September employment report and the JOLTS job openings data. In addition, the ISM PMI and the PCE price index will be released. Globally, data on the eurozone’s inflation and unemployment rates, China’s PMI, Japan’s industrial production and retail sales, and the Bank of Japan’s “Tankan” survey will be released..

 

Last week, the Nikkei 225 closed above the projected range. The high was about 180 yen higher than the upper limit of the range, and the low was about 1,110 yen higher than the lower limit.

This week, the Nikkei 225 is expected to trade within a range defined by the upper limit at the +2σ Bollinger Band (currently around 67,180 yen) and the lower limit at the 25-day moving average (currently 65,270 yen)..

 

This week, the Nikkei Average is likely to serve as a litmus test heading into year-end, as investors watch to see if it can break out of its weekly triangle consolidation pattern.