Nikkei 225 futures are expected to remain range-bound this week, but dip-buying long positions targeting ¥70,000 are coming into focus. Ahead of the August SQ, the market is expected to see a tussle between continued short-term rebound momentum and resistance overhead.
Nikkei 225 futures are expected to track developments in US markets and movements in crude oil prices related to the situation in the Middle East this week. The market is seen as likely to favor long positions waiting to buy on dips, with ¥70,000 potentially coming into range. Last week, long positions prevailed, driving futures back into the ¥67,000 range, and they were also reported to have broken above two moving averages.
In recent trading, Nikkei 225 futures recovered to the ¥67,000 range before strengthening their rebound into the ¥68,000 range and breaking above the +1σ Bollinger Band. On the 14th, they extended their gains temporarily to ¥69,650 and at one point came close to the +2σ level. Over the course of the week, the bands shifted from contraction to expansion, highlighting moves within the range.
In US markets, rate hike expectations receded after July CPI and PPI slowed. However, AI-related and semiconductor stocks attracted buying, and large-cap stocks in the Tokyo market, including semiconductor stocks, contributed to the Nikkei average, while concern also spread over stocks with weak earnings outlooks. In US markets on the 14th, a series of disappointing retail-related indicators and movements in WTI crude oil prices weighed on sentiment.
Key events scheduled for the week include the NY Fed Empire State Manufacturing Index, FOMC minutes, and the Conference Board Leading Economic Index. The SQ value was calculated at around ¥69,702 for Nikkei 225 futures, and trading around the upper and lower bounds of the Ichimoku cloud is expected to influence short-term supply and demand. The NT multiple is holding in the 16x range, raising the possibility of moves targeting a spread through NT longs.