The Nikkei rebounded strongly on Friday, recovering from earlier losses as positive sentiment from Wall Street and broad sector gains lifted the market. Despite a challenging week, the index displayed resilience, with traders watching for signs of a sustained recovery.
Nikkei rebounds with signs of resilience
The Nikkei climbed 1.02% on Friday, closing at 38,301.15 and recovering from a dip below the 38,000 threshold earlier in the session.
Earlier this week, the index hit a low of 37,692.15—its weakest level since 1 November—but the subsequent rally demonstrated its resilience. Despite Friday’s recovery, the Nikkei remains set for a 1.6% decline over the week.
Nikkei 225 consolidates near key resistance at 38,500, eyeing a breakout or potential pullback to 38,200, as seen on the VT Markets app.
From a technical perspective, key support levels lie near 38,200 and 37,700. A break below these points could trigger a deeper pullback, while sustained momentum above 38,500 may push the index towards the next resistance zone around 39,000.
Wall Street boosts sentiment
Japanese equities received a boost from Wall Street’s strong performance on Thursday. Nvidia’s 0.5% post-earnings rise uplifted the semiconductor sector, contributing to a 1.6% increase in the US semiconductor index.
The positive close for major US indices, with the Dow and the S&P 500 reaching one-week highs, fuelled optimism in Japan.
Semiconductor stocks spearheaded the gains, but refiners also played a key role, surging by 3.25%. Broader market support came from various industries, highlighting a robust recovery.
Out of 225 Nikkei-listed stocks, 172 advanced, reflecting widespread optimism. Many traders viewed the dip below the 38,000 mark as an opportunity for renewed investments.
The rally showcases shifting market sentiment, as both domestic and foreign investors focus on the Nikkei.
While refiners drove substantial gains, other heavyweight sectors contributed to the upward momentum. Across Tokyo’s 33 industry sub-indexes, only three posted losses, with pharmaceuticals underperforming. Daiichi Sankyo and Chugai Pharmaceutical fell by 0.94% and 0.91%, respectively, slightly dampening the overall market gains.
Focus shifts to Central Bank policy
The Nikkei’s recovery above the 38,000 level underscores its resilience in a turbulent week.
Traders are now closely monitoring global equity markets and domestic economic indicators to gauge whether this rebound signals the start of a broader recovery or a temporary pause in the downtrend.
The index’s future movement will largely depend on whether global market catalysts continue to bolster sentiment or if external uncertainties weigh it down further.
