The Nikkei 225 rebounded on the 3rd, rising \660 to \53,123. U.S. semiconductor and technology stocks were bought the previous day, and the sharp \1,276 drop in the Nikkei on the 2nd also prompted technical bounce-back buying.

Market participants' attention is focused on the Iran situation. In particular, President Trump's speech on the morning of the 2nd (Japan time) drew significant interest, but there was no mention of an early ceasefire. Rather, his statement that "we will attack intensely for two to three weeks" pushed up crude oil prices and contributed to the Nikkei's sharp decline on the 2nd. Some market participants questioned whether "the speech was necessary if he was just going to maintain the same stance," while others noted that "he was probably compelled to do so to stem the decline in his administration's approval ratings."

In other words, with midterm elections approaching, the administration would want to avoid a quagmire in the Iran war at all costs, and speculation that hostilities will soon move toward resolution is providing support for the market. Some analysts note that "when the Nikkei fell to the \50,500 range on March 30-31, the divergence from the 25-day moving average reached nearly 8%. In most cases, a divergence of around 7% marks the bottom. The stock price may have reached a temporary floor at the end of March."

April has an anomaly (empirical rule) of typically seeing foreign investors strengthen their buying stance, with the market tending to perform well. According to a major securities firm, the probability of net buying in April has exceeded 90% since 1990, with average net purchases appearing to be close to \600 billion. In fact, net buying in April 2024 and 2025 both exceeded \1 trillion.

From foreign investors' perspective, while Japanese stocks have the vulnerability of high dependence on Middle Eastern oil, they also have the strength of having maintained friendly relations with the United States, Iran, and the Middle East, which are parties to the conflict. Although the Iran situation will have a significant impact, whether foreign buying flows in as usual will be a major point for the April market.

Next week, attention will focus on U.S. inflation indicators, with the U.S. March Consumer Price Index (CPI) to be released on the 10th. In Japan, earnings announcements are scheduled for FAST RETAILING CO., LTD. <9983> on the 9th, and RYOHIN KEIKAKU CO.,LTD. <7453> and YASKAWA Electric Corporation <6506> on the 10th.

Other scheduled events include overseas releases: U.S. March ISM Non-Manufacturing Index on the 6th, U.S. February durable goods on the 7th, FOMC minutes from the March 17-18 meeting on the 8th, U.S. February Personal Consumption Expenditures (PCE) price index and U.S. Q4 GDP revised estimate on the 9th, and U.S. April University of Michigan Consumer Sentiment Index on the 10th. Levi Strauss will announce earnings on the 7th and Constellation Brands on the 9th.

Domestic releases include the Bank of Japan's Regional Economic Report (Sakura Report) on the 6th, February Household Survey on the 7th, and March Economy Watchers Survey on the 8th. The 10th will be the options SQ calculation day. Earnings announcements are scheduled for NACHI-FUJIKOSHI CORP. <6474> and WEATHERNEWS INC. <4825> on the 6th, Daiseki Co.,Ltd. <9793> and PAL GROUP Holdings CO.,LTD. <2726> on the 7th, ABC-MART,INC. <2670> and KOMEDA Holdings Co., Ltd <3543> on the 8th, Seven & I Holdings Co.,Ltd. <3382> and AEON Co.,Ltd. <8267> on the 9th, and BIC CAMERA INC. <3048> on the 10th. New listings are scheduled for System Exe on the 6th, Hito to Hito Holdings on the 7th, and Softex on the 9th. The Nikkei 225 is expected to trade in a range of approximately \51,500 to \54,700 next week. (Hideyuki Okazato)

Source: MINKABU PRESS