Insights 
VT 
Key Points:
- Nikkei ends 0.14% lower at 38,128.13, pulling back from Tuesday’s three-month high.
- Topix snaps 13-session winning streak, falling 0.32%—its first decline since April 25.
Japan’s equity market cooled on Wednesday as the Nikkei 225 fell 0.14% to 38,128.13, weighed by profit-taking following a swift rebound to the 38,000 level. The broader Topix index declined 0.32% to 2,763.29, ending a 13-day rally that marked its longest winning streak since August 2009.
The pullback came despite a softer U.S. dollar and improving sentiment over global trade following the U.S.-China 90-day tariff truce.
Sector-wise, losses were concentrated in heavyweight exporters and auto stocks. Toyota Motor dropped 3.53%, reflecting cautious sentiment despite broader optimism over trade. Fast Retailing, parent of Uniqlo, fell 1.09% and was the biggest individual drag on the index.
On the flip side, Sony rose 3.67% after forecasting a 0.3% increase in annual operating profit for the year ending March 2026—signalling stability in consumer tech demand. However, Yaskawa Electric lost 1.88% after being removed from MSCI’s standard index in its latest quarterly review.
Of the more than 1,600 companies on the Tokyo Stock Exchange’s Prime Market, 63% declined, while only 34% advanced.
Technical Analysis
The Nikkei 225 has shown notable intraday volatility, dropping from a session high of 38,760.93 before finding support at 37,835.93 on 14 May. The steep selloff pulled the index well below its 30-period moving average, confirming a short-term bearish phase. However, a modest rebound has since emerged, with price recovering above the 5- and 10-period MAs—hinting at a potential bullish correction.
Picture: Nikkei rebounds from 37,835 low, but faces key test near 38,200 amid mixed momentum signals, as seen on the VT Markets app
The MACD has crossed above the signal line and shifted into positive histogram territory, suggesting that momentum may be turning in favour of the bulls. That said, a clear break above the 38,200–38,250 region is needed to confirm a reversal and resume upward momentum. Until then, price action remains vulnerable to further dips toward the recent low if resistance holds.
Cautious Forecast
With the Nikkei stalling near resistance and the Topix rally cooling off, Japanese equities may now enter a brief consolidation. While trade sentiment has improved, investor focus will likely shift to domestic earnings, BOJ rate commentary, and further signals from U.S.-China negotiations. Near-term downside risk could extend if key support at 37,800 fails to hold.
