The Nikkei 225 Index continues its upward trend, reaching a new all-time high of 44,186 points today. The index has surged approximately 43% since its low on April 7 of this year, when it recorded 30,793 points, up to today’s peak. It has also risen around 9% year-to-date.
Additionally, Japan’s TOPIX Index is also hitting record highs, closing at 3,162 points today, marking a gain of about 13% since the beginning of the year.
The notable rally in Japanese equities is supported by several factors, most notably:
- The announcement by Prime Minister Shigeru Ishiba over the weekend of his resignation. Known for his strict economic policies, Ishiba’s departure has fueled expectations that his successor will take a less stringent approach.
- The weakness of the Japanese yen, currently trading near 147 per US dollar, which is encouraging foreign investors to pour money into Japanese markets. Notably, foreign investment in Japanese equities exceeded ¥4 trillion in August 2025.
- Stronger-than-expected GDP growth in Q2, with the economy expanding 2.2%, well above expectations (1.0%) and the previous reading (-0.2%), reflecting ongoing momentum despite tariff-related challenges.
- Uncertainty surrounding the Bank of Japan’s monetary policy outlook, particularly regarding interest rates, with markets widely expecting rates to be held steady at 0.50% at the upcoming September 19, 2025, meeting.
From a technical perspective, indicators suggest the Nikkei 225 may continue higher for several reasons:
- Alignment and upward movement of the 20-day, 50-day, and 200-day moving averages, with the 20-day crossing above the 50-day, and the 50-day above the 200-day.
- The Relative Strength Index (RSI) currently stands at 63, signaling further bullish momentum.
- Convergence between the MACD (blue line) and the Signal Line (orange line), with any upward crossover indicating additional positive momentum.
- The Positive Directional Movement Index (DMI+) is around 39 points, compared to the Negative Directional Movement Index (DMI-) at roughly 23 points. The wide gap between the two highlights strong buying pressure on the Nikkei 225.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice. All trading involves risk.
