After the Nikkei plunged last week, buying returned toward the end of the week. At the start of the week in Tokyo, the focus will be whether the Nikkei can hold above ¥66,000, with the rebound in U.S. stocks expected to provide a cue for a recovery.
The Nikkei approached ¥70,000 at one point in Tokyo trading last week, but plunged on the 18th and 19th, briefly falling to ¥65,133.98 on the 19th. It closed at ¥66,016.36 on the 21st, and attention is now focused on its performance at the start of the week.
The three major U.S. stock indexes all rebounded at the end of the week, but gains were limited on a weekly basis, and the market has not reached a broad risk-on phase. Persistently high U.S. long-term interest rates remain a factor weighing on the valuations of growth stocks.
Caution among individual investors is evident in market sentiment, while the settlement value of overseas stock transactions by South Korean investors has fallen sharply. The dollar-yen pair is trading in the upper ¥158 range, and U.S. corporate earnings and movements in U.S. Treasury yields could trigger volatility this week.
The key point to watch at the start of the week is whether the Nikkei can hold above ¥66,000. The ¥65,000 zone is seen as a potential downside level, while the upside benchmark is around ¥66,394. Trading on the 24th is expected to determine the direction for the week.