Insights 
VT 
Key Points
- Nikkei 225 gains 1.7%, closes at 38,832.65, hitting a 4-month high
- OSE rubber futures jump 2.69% to 305 yen/kg amid wet weather and tight supply
Japanese equities rallied sharply on Wednesday, with the Nikkei 225 closing at 38,832.65—its highest level in four months—on a combination of a weakening yen and renewed trader appetite for risk assets. The index rose 1.7% for the session, with momentum gathering in the second half of the day following a breakout from the 38,140.65 intraday low. The late surge saw the index reach a session high of 38,904.65 before easing slightly into the close.
The gains in equities spilled over into commodity-linked assets. The Osaka Exchange rubber futures contract for November delivery rose 2.69% to 305 yen per kg, reaching an intraday high of 305.6 yen—the highest since May 30.
Weather-related concerns have been fuelling the rally, with heavy rainfall interfering with rubber tapping operations both in Japan and major producers such as Thailand. Thai authorities issued flash flood warnings for June 20–23, raising fears of crop damage and tightening near-term supply.
Currency markets added to the Nikkei’s tailwind. The yen weakened to a one-week low of 145.445 against the U.S. dollar, making Japanese equities more attractive to foreign traders. The correlation between the yen and the Nikkei continues to hold, with a softer currency supporting exporters and increasing the appeal of yen-denominated assets for overseas buyers.
Japan’s macro data added a more cautious undertone. Exports fell in May for the first time in eight months, primarily driven by reduced shipments of automobiles. With sweeping U.S. tariffs now weighing on Japanese auto sales, there is growing concern that rubber demand could soften if manufacturing slows. Even so, short-term tightness in supply—combined with speculation-driven flows—appears to be dominating price action for now.
Technical Analysis
The Nikkei 225 surged strongly in the latter half of this 15-minute chart, closing at 38,832.65, up over 1.70% from the session open. After consolidating sideways throughout much of June 17 and into early June 18, the index formed a bullish breakout from the 38,140.65 support base, marking a powerful rally that touched a session high of 38,904.65 before tapering slightly near close.
Picture: Buyers drive late-session rally toward key resistance zone, as seen on the VT Markets app
Technically, the MACD histogram printed multiple strong green bars, confirming upward momentum, though the slope of the MACD line is now flattening—hinting at possible short-term exhaustion. Price action is also approaching overhead resistance around 38,850–38,900, where supply previously halted momentum. Meanwhile, the 5/10/30 EMAs are in bullish alignment and fanning out sharply, reinforcing trend strength.
With weather forecasts still unfavourable and risk-on sentiment prevailing in Tokyo, rubber futures and the Nikkei may retain upward pressure into the end of the week. Traders should remain alert for any changes in weather reports and updates from BOJ policy discussions, as these may provide catalysts for price consolidation or acceleration.
