The Nikkei 225 is expected to trade in a range of ¥62,500-¥66,500 this week, with markets likely to seek direction ahead of developments in the Middle East, crude oil prices and monetary policy decisions in Japan and the US.
Japanese stocks are expected to trade cautiously this week as investors assess developments in the Middle East and crude oil prices while refraining from aggressive trading ahead of monetary policy decisions in Japan and the US. The previous week's closing session ended sharply lower, affected by higher crude oil prices and heightened concerns over inflation in the US.
Although some signs of stabilization in crude oil prices emerged in US markets, new concerns have arisen over the situation in the Middle East. Reports of attacks on pipelines in Saudi Arabia and vessels in the Strait of Hormuz have revived uncertainty over crude oil supplies.
The Federal Open Market Committee (FOMC) and the Bank of Japan's Monetary Policy Meeting will be the focus this week. The FOMC will meet on the 15th-16th, with the results to be announced on the 16th, while the Bank of Japan will hold its policy meeting on the 17th-18th. CPI data and a press conference by the governor are scheduled for the 18th.
Accordingly, a wait-and-see stance is expected to continue through the 18th. If the situation in the Middle East and interest rate trends stabilize, stocks that have fallen too far may attract bargain hunting. From the 18th onward, however, supply-demand conditions may be more volatile because of the market holiday period.