Nikkei Rebounds as Yen Softens

Key Points

• The Nikkei 225 rose 0.85% to close at 53,333.54.
• Chip stocks advanced, with Advantest up 5.85% and Tokyo Electron rising 2.53%.

Japan’s Nikkei share average closed higher on Tuesday, recovering from early caution as technology stocks extended their advance.

The index rose 0.85% to 53,333.54, while the broader Topix ended 0.31% higher at 3,563.59.

The session opened on a guarded note. Traders closely tracked the yen, which had spiked against the US dollar on Friday and climbed to a more than two-month high overnight.

That move initially weighed on equities, particularly exporters, as a stronger yen tends to erode overseas earnings when repatriated.

Sentiment improved later in the day as the yen weakened into the close. This shift eased pressure on stocks and allowed buyers to step back into the market, lifting the Nikkei off its intraday lows.

A cautious forecast suggests Japanese equities may remain sensitive to currency swings in the near term, especially as political and policy signals evolve.

Yen Moves Drive Late-Session Support

Speculation around currency intervention played a key role in shaping market behaviour. Comments from Japan’s prime minister and a senior currency diplomat fuelled talk of potential coordination with US authorities, adding volatility to the yen.

As the yen softened toward the end of the session, equities found support. Market participants pointed to the currency’s retreat as a direct catalyst for the rebound in share prices, particularly across sectors with large export exposure.

If the yen continues to fluctuate sharply, Japanese equities may see further intraday swings, with traders quick to adjust positioning in response to currency headlines.

Technology and Chips Lead Gains

Technology stocks provided the main lift to the Nikkei. Chip-related shares outperformed, with Advantest jumping 5.85% and Tokyo Electron rising 2.53%.

The strength in these names reflected broader regional momentum, as South Korea’s KOSPI rallied to a new peak.

The advance in Korean equities came despite President Donald Trump’s renewed threat to raise tariffs on autos and other imports from South Korea.

That resilience helped underpin sentiment toward Japanese semiconductor names, which often move in tandem with regional peers.

A cautious outlook suggests tech leadership may persist as long as global demand for semiconductors remains firm, though geopolitical trade risks could reintroduce volatility.

Technical Analysis

The Nikkei 225 surged to 53,193.22, gaining +694.07 points (+1.32%), but recent candles reveal a sharp pullback from the session high of 53,373.22.

After peaking early, prices slid into a steep correction, bottoming at 53,140.22 before attempting a mild rebound.

Momentum indicators suggest some recovery as the price reclaims short-term moving averages (MA5 and MA10). However, the decline was accompanied by strong red volume bars, hinting at profit-taking pressure.

Buyers will need to hold above 53,190 and reclaim the 53,235–53,248 zone (MA20/30) to sustain the uptrend.

Short-Term Outlook

The Nikkei’s ability to finish higher after early weakness reflects a market still willing to buy dips, particularly in technology shares.

However, the backdrop remains complex with currency volatility, election dynamics, and global trade risks all in play.

Near-term direction is likely to hinge on the yen’s trajectory and further signals around policy coordination or intervention.

Continued softness in the yen could support equities, while renewed strength could reintroduce pressure, especially for export-heavy sectors.

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