Japan’s Nikkei expected to rise as high as 42,500

Japan’s Nikkei is opening in a softish manner this morning, dropping under 38K for the first time since December 2.

Reuters report on their survey of analysts.

• Nikkei 225
  is forecast to rise 4.6% to 40,000 by mid-2025
• 11.15% to 42,500
  by year-end
• outlook
  remains unchanged from the November 2024 poll

Key Drivers:

• Analysts expect
  stronger earnings once uncertainties over U.S. tariff policy under
  President Donald Trump are resolved. Japanese automakers and
  manufacturers remain cautious, given their reliance on factories in
  Mexico and Canada.

Bank of Japan (BOJ)
Policy

• The BOJ is expected
  to raise rates from 0.50% to 0.75% this year, which could influence
  investor sentiment. Once rate hikes stabilize, foreign investors may
  return to Japan’s market.

Currency Risks

• A stronger yen could
  dampen exporter profits, limiting market gains. The yen recently hit
  a 2.5-month high, affecting corporate earnings expectations.

Market Uncertainty

• If U.S. tariffs
  trigger a trade war, some analysts predict a 10% Nikkei decline,
  particularly impacting automakers.

Despite risks,
analysts remain optimistic, citing potential record profits for
Japanese firms in the next fiscal year.

**

Update:

Weekly candles Nikkei 225

This article was written by Eamonn Sheridan at www.forexlive.com.