Outlook for the Nikkei average this week [15 November 2026]

 [Fundamental viewpoint]

In the U.S. market last week, stock indices posted gains as concerns eased regarding a potential slowdown in spending on AI and infrastructure, as well as worries over rising crude oil prices.

Weekly performance: Dow Jones +2.074%, NASDAQ +2.27%, S&P 500 +2.51%

 

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 0.53 points. This undervaluation stems from the difference between the S&P 500’s P/E ratio of 18.8 and the projected P/E ratio of 15.4 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 0.53 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 66,550 yen.

Consequently, the Japanese market is undervalued by about 5,410 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    Last week, the weekly chart for the NY Dow closed as a bullish candle. On the daily chart, the index is positioned above the 200-day moving average and within the "cloud" of the Ichimoku Kinko Hyo indicator. The weekly chart for the NASDAQ also closed as a bullish candle; however, on the daily chart, it remains below both the 200-day moving average and the Ichimoku cloud. This week, the key focus will be on whether the Dow can maintain its position above the 25-day moving average.

②    Following the release of earnings results, the projected ROE for Nikkei 225 constituent stocks stood at +11.7%. This represents an improvement of +0.7 percentage points compared to three months ago. The profit growth rate was +25.7%, marking an improvement of +7.8 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 2.24 to 2.28. The dollar-yen exchange rate moved in the direction of yen weakness, ranging from the 157-yen level to the 160-yen level. The Dollar Index rose 1.11% 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.

There was a net sell position for the first week of November. It is highly likely that there was a net buy position for the second week of November, and a net sell position is expected for this week. Last week, points ① and ③—out of the five points—served as bullish factors.

 

[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 1.4 percentage points (equivalent to approximately 860 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 4.7 percentage points (equivalent to approximately 2,870 yen on the Nikkei Stock Average).

 

The Japanese market is currently weaker than the NY Dow and the NASDAQ. The VIX—an indicator of volatility in the U.S. market—fell to 19.3 for the week. The Nikkei VI also declined, reaching 34.4 for the week. Both the U.S. and Japanese markets are in a state of "extreme fear."

 

The Nikkei Stock Average is positioned above its 9-day moving average but below its 25-day moving average, signaling a "yellow light" for the short-term trend.

Furthermore, the Nikkei is situated below the "cloud" of the Ichimoku Kinko Hyo chart. The composite deviation rate stands at -11.2%, and the deviation from the 200-day moving average is -1.6%. With these three factors all in negative territory, a "red 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 within 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 “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 a shift toward a weaker yen, with the 152-yen level reached in September 2026 serving as the bottom. For this week, the exchange rate is expected to range between the 160-yen and 158-yen levels.

 

The primary focus for the U.S. market this week is whether the outflow of capital from high-tech stocks will persist; this will likely be influenced by Nvidia’s earnings results and the potential IPO of Anthropic. Key economic indicators to watch include the FOMC meeting minutes, retail sales, industrial production, and housing-related data. On the global front, upcoming releases include inflation, unemployment, and retail sales figures for the U.K.; industrial production, retail sales, housing prices, fixed-asset investment, and unemployment data for China; and the preliminary third-quarter GDP figures for Japan.

 

Last week, the Nikkei Stock Average performed above the projected range, exceeding the upper bound by approximately 1,310 yen and the lower bound by about 3,130 yen.

For this week, the Nikkei is expected to fluctuate within a range defined by the 25-day moving average (currently around 63,450 yen) as the upper limit and the -2σ Bollinger Band (currently 57,740 yen) as the lower limit..

 

Depending on the impact of Nvidia’s earnings results and Anthropic’s IPO, we should soon have an answer as to whether the Nikkei Stock Average can continue its rise above the 200-day moving average this week.