Maxco Futures — The Nikkei 225 index weakened to around 49,300, pressured by a more cautious market tone as expectations for a Bank of Japan (BOJ) rate hike increase ahead of the December meeting. Market probability now places the likelihood of a rate hike at nearly 80%, triggering yen appreciation and rising Japanese government bond yields.
Export-oriented sectors — from electronics to heavy industry — were among the hardest hit, as a stronger yen threatens profit margins and reduces global competitiveness. Interest-rate-sensitive stocks also faced pressure amid concerns over higher funding costs.
From a technical standpoint, the index is in a consolidation phase, with signals turning increasingly bearish. The Parabolic SAR indicates downside pressure, while RSI shows weakening buying momentum.
On the policy front, BOJ’s move toward rate normalization marks a potential turning point after years of ultra-loose monetary stimulus. With inflation still elevated and wage growth continuing, markets see a higher probability of further tightening in the coming months.
For now, investors are awaiting upcoming inflation data and additional BOJ communication — expected to be key catalysts for the market’s next direction.
Technical Correction Outlook
From a technical perspective, the Nikkei index is likely to see further downside as part of an ongoing technical correction. The author identifies several daily downside test levels at 49,000, 48,270, 48,000, and 46,730, which serve as support areas within the medium intraday movement. Meanwhile, the daily stochastic shows potential for continued decline after forming a bearish cross at 77.73.
Ade Yunus, ST WPA
Global Market Strategies