JPN225 Narrowly Avoids Another Losing Month, but Correction Could Persist
JPN225 Analysis
The benchmark Japanese index surpassed the 1989 peak to set new all-time highs earlier this year, in a rally partly fueled by the central bank's ultra-loose policies (in contrast with its major counterparts) and the Yen's collapse that made Japanese stocks cheaper for foreign investors. However, the BoJ raised rates out of negative territory in a landmark decision in March and is likely to hike again this year, in a policy shift that could weigh on the stock market. Comparisons with 1989 also offer reasons for concern, as the Nikkei went into a prolonged decline after that record high, while the central bank raised rates by 3.5% in just over a year.
JPN225 losses ground this quarter as it pulls back from its March record and the monetary policy shift creates scope for deeper correction towards the broader 36K region (200Days EMA), although further weakness has a higher degree of difficulty. The index however shows resiliency to the headwinds and managed to avoid a back-to-back negative month, even if narrowly. Bulls have the ability to push higher and challenge the record high (41,227).
The Bank of Japan may have started normalizing its policy, but retains an accommodative stance, while the Yen's demise persists. Furthermore, the rally of the stock markets is a attributed to a wider range of factors that can continue to spur growth, such as structural reforms, favorable policies by the government and strong corporate earnings.
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. With extensive experience in market analysis and a strong foundation in international relations, he brings a unique perspective to financial markets. Nikos emphasizes not only technical analysis but also on fundamentals and the growing influence of geopolitics on financial trends.
As a Senior Financial Editorial Writer, he delivers comprehensive and forward-looking insights across a wide range of asset classes, including equities, commodities, and currencies. His work explores how macroeconomic events, political developments, and global policies impact market dynamics, providing readers with a deeper understanding of both short-term movements and long-term trends.
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