Staying Long on Nikkei 225 As Index Stabilizes After Diplomatic Tensions Trigger Sell-Off
Japan’s benchmark index Nikkei has cooled after a powerful run, but growing political tensions and shifting tech dynamics are now shaping...
Quick overview
- Japan's Nikkei index has retreated from record highs in November but remains stable above the critical 48,000 level.
- Geopolitical tensions, particularly regarding Taiwan, have increased market unease following discussions between Japan's prime minister and Donald Trump.
- A significant drop in SoftBank Group shares was offset by gains in chip-related stocks, allowing the Nikkei to recover most of its losses.
- Despite short-term volatility, futures markets indicate a buy signal, suggesting continued upside potential for the index.
Japan’s benchmark index Nikkei has cooled after a powerful run, but growing political tensions and shifting tech dynamics are now shaping its next move.
November Retreat And Emerging Support
The Nikkei futures Index has pulled back through November following its recent record highs, yet it continues to find stability above the critical 48,000 level. That area once again acted as a floor on Tuesday, preventing a deeper slide despite rising uncertainty in the region.
Nikkei 225 Futures Chart Daily – The 50 SMA Continues to Hold as Support
The 50-day moving average has also provided steady technical support, helping to attract buyers as the index tested lower ground.
Geopolitical Tensions Influence Sentiment
Market unease followed comments from Japan’s prime minister after a call with Donald Trump, where the two discussed increasing friction between China and Japan surrounding Taiwan. Earlier warnings that Japan could respond militarily if China were to attack Taiwan added weight to the situation, drawing attention in Washington and Beijing alike. With Trump expected to debrief on his recent exchange with Xi, investors interpreted the developments as a sign of heightened risk within the broader Indo-Pacific landscape.
Technology Split Shapes The Session
The Nikkei opened sharply lower and at one point was down nearly 3%. Sentiment was further pressured by a steep decline in SoftBank Group, which fell close to 10% amid growing competition between major AI platforms. However, strength in chip-related stocks such as Advantest and Tokyo Electron mirrored optimism seen in U.S. tech markets, allowing the index to recover most of its losses and finish the session only slightly down.
Outlook Remains Constructive
Despite near-term volatility, futures markets continue to flash a buy signal, suggesting that upside potential still outweighs downside risk. The broader uptrend remains intact, supported by strong technical foundations and improving global tech sentiment.
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