[Opening Comment] Trading Likely to Become More Range-Bound After Initial Buying Runs Its Course

Buying led the Japanese market on the 14th against the backdrop of gains in US markets, but trading is expected to become more range-bound after the initial buying runs its course. In US markets, the Dow rose 509 points and the Nasdaq gained 251 points in a sharp rebound, while falling crude oil prices provided a catalyst for buying back into the market. Nikkei 225 futures moved in line with trading on the Osaka Exchange, and rose broadly from daytime levels in the afternoon.

The Nikkei 225 ended daytime trading around ¥64,510, with movements toward the lower -1σ Bollinger Band observed. Some market participants said that a move above this level could trigger short covering. In the futures market, prices were at one point sold down to ¥63,770, but buying again gained the upper hand at times as activity in US markets provided a catalyst.

The decline in crude oil prices supported expectations of easing tensions in the Middle East, and reports said that Gulf countries and Iran were expected to hold a foreign ministers' meeting. While some expected this to ease excessive concerns about the situation in the Middle East, reports also said that no agreement document would be signed at the meeting. Market focus is shifting to whether semiconductor and AI-related stocks can stop falling, while some have pointed to the possibility that funds could again move into domestic-demand stocks.

With central bank events scheduled this week, investors are expected to remain reluctant to trade aggressively. In the short term, markets are likely to be easily swayed by movements in futures, while funds are expected to move into small and mid-cap stocks in emerging markets while avoiding index-related trading. Broadly, many market participants expect range-bound trading to continue after the initial buying runs its course.