<Fundamental>
Japanese equities extended their rally last week, supported by strong economic data and expectations of Fed rate cuts. Notably, Japan’s Q2 GDP exceeded consensus, helping propel the market to fresh highs. GDP grew 1.0% YoY (prev. 0.6%, cons. 0.4%), easing recession fears despite lingering uncertainty over Japan-US tariff negotiations throughout the quarter. The achievement drew particular market attention, given the challenging trade backdrop.
Meanwhile, US Treasury Secretary Bessent sparked controversy by openly pressuring the BoJ to tighten policy, citing Japan’s inflation as a severe problem. Markets cautioned that if such remarks were to influence actual policy action, investors could view a BoJ rate hike as politically driven, complicating its execution.
<Technical>
NIKKEI 225 breached above the ascending channel’s upper bound and set a new high. The widening gap between both EMAs suggests the potential extension of bullish momentum. If NIKKEI 225 holds above the channel’s upper bound, the index may test the resistance at 44000. Conversely, if NIKKEI 225 reenters the channel and breaks below the support at 42115, the index could retreat toward the next support at 40800.
Japanese equities extended their rally last week, supported by strong economic data and expectations of Fed rate cuts. Notably, Japan’s Q2 GDP exceeded consensus, helping propel the market to fresh highs. GDP grew 1.0% YoY (prev. 0.6%, cons. 0.4%), easing recession fears despite lingering uncertainty over Japan-US tariff negotiations throughout the quarter. The achievement drew particular market attention, given the challenging trade backdrop.
Meanwhile, US Treasury Secretary Bessent sparked controversy by openly pressuring the BoJ to tighten policy, citing Japan’s inflation as a severe problem. Markets cautioned that if such remarks were to influence actual policy action, investors could view a BoJ rate hike as politically driven, complicating its execution.
<Technical>
NIKKEI 225 breached above the ascending channel’s upper bound and set a new high. The widening gap between both EMAs suggests the potential extension of bullish momentum. If NIKKEI 225 holds above the channel’s upper bound, the index may test the resistance at 44000. Conversely, if NIKKEI 225 reenters the channel and breaks below the support at 42115, the index could retreat toward the next support at 40800.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.