The Nikkei Average is entering a phase in which it could break above its 75-day moving average, and expectations of a stronger rebound trend are building. Depending on futures and US market movements, the index is expected to test higher levels in the short term.
The Nikkei Average opened higher on buying prompted by gains in US stocks, and some market participants said it could strengthen under the leadership of futures if it breaks above the 75-day moving average. It closed around ¥66,470 in daytime trading, while some noted that the 75-day moving average was functioning as upside resistance.
Recently, rebounds in semiconductor and AI-related stocks have helped lift the broader index, with Tokyo Electron and Advantest breaking above their 25-day moving averages and supporting the rise. A rebound in the SOX Index also helped the market recover.
The US release of major economic indicators this week is expected to affect the market outlook, and the market is expected to remain susceptible to movements in US long-term interest rates.
However, the 75-day moving average has often acted as resistance since the sharp decline in August, and some market participants also said that selling by investors waiting to exit on a rebound is likely when the index approaches that level. This week's scheduled releases include the ADP employment report, PCE, the final GDP figure, the ISM index and the employment report. Market sentiment in Japan and the United States could change depending on the US market's reaction.
Overall, improvements in long-term interest-rate trends and market sentiment are cited as factors supporting the market, while the current environment is seen as one requiring caution over aggressive positioning.