Insights 
VT 
Key Points
- Nikkei closes at 38,446.65, up 1.22% from the open
- Initial losses reversed as exporters benefit from weaker yen
- Oil stocks outperform, chipmakers drag overall index
Japan’s Nikkei 225 recovered ground in late trading on Monday, closing at 38,446.65, rebounding from an early plunge to 37,951.65. The index’s 1.22% rally from the open reflects a broader stabilisation after initial panic following U.S. strikes on Iranian nuclear facilities.
Risk aversion surged during the Asian session as oil prices climbed to six-month highs, weighing on sentiment. Japan, a major importer of crude, faces direct economic pressure from energy price spikes. Traders initially responded with broad selling, especially among manufacturers, on concerns about higher input costs and strained corporate earnings.
However, market mood began to stabilise as the Japanese yen weakened to a six-week low against the U.S. dollar, providing a lift to export-heavy equities. A weaker yen boosts the overseas profits of firms like Toyota, Sony, and industrial producers when repatriated.
In contrast, oil explorers and energy-related stocks surged in response to higher Brent prices. The Topix mining sub-index climbed 1.49%, making it the day’s strongest sectoral performer.
Technical Analysis
The Nikkei 225 has posted a clean intraday recovery, bouncing from a session low of 37951.65 and climbing back above the 38400 level. The price now sits just under immediate resistance at 38459.35, with short-term momentum supported by a solid MACD crossover and rising histogram bars.
Picture: Asian equities find support; Nikkei leads with 1.22% gain, as seen on the VT Markets app
After a choppy sideways range over the past two sessions, this latest push aligns with broader optimism across Asian equities. A firm close above 38460 would set up a potential retest of 38600 or higher if momentum continues.
The moving averages (5, 10, 30) are now aligned in a bullish stack, with price action clearing the 30-period MA decisively. Short-term bullish control is likely unless we see a rejection back below 38350.
With global conflict and instability persisting, particularly around the Strait of Hormuz, further sharp swings in the Nikkei cannot be ruled out. For now, Monday’s bounce offers temporary relief—but sentiment remains fragile.
