The Nikkei Average rose ¥1,244 week on week last week to finish at ¥65,606. A break above the 5-day moving average is the focus for a full-fledged recovery, while expectations surrounding monetary policy in Japan and the United States and buying based on corporate earnings will drive the market this week ahead of SQ day.
The Nikkei Average rose to ¥65,606 last week, ending ¥1,244 higher than at the end of the previous week. Buying broadened as investors took their cues from easing concerns over the situation in the Middle East and corporate earnings, while other stock indexes, including TOPIX and the Tokyo Stock Price Index, also recovered.
Looking at buying interest by stock, names outside the AI and semiconductor-related sectors also ranked among the largest contributors, suggesting that the overall market tone is not unfavorable. However, performance within AI-related stocks was mixed, and export-related stocks made a notable negative contribution against a backdrop of yen appreciation.
The focus this week will be whether the market can maintain its recovery trend. A recovery above the 75-day moving average and a break above the 5-day moving average are expected to be important points. Investors will need to watch for the appearance of distribution days, and volatile trading may occur ahead of SQ day.
Expectations surrounding monetary policy in Japan and the United States and corporate earnings announcements will influence the market this week. The Bank of Japan's Summary of Opinions publication date, along with the release dates for US CPI, PPI and retail sales data, are approaching. Depending on the outlook for US interest rates, the yen could continue to appreciate, while buying interest in individual stocks is expected to support the market at times.