JP 225 forecast: the index hits new all-time high

The JP 225 stock index has once again reached a new all-time high after breaking above the resistance level. The JP 225 forecast for today is positive.

JP 225 forecast: key takeaways

• Recent data: Japan’s core CPI increased by 2.0% year-on-year
• Market impact: the effect on the Japanese equity market is restraining

JP 225 fundamental analysis

The release of Japan’s core inflation at 2.0% year-on-year, in line with the 2.0% forecast and down from the previous 2.4%, primarily signals a continued slowdown in price pressure and a move closer to the target level. Since the figure matched expectations, there was no surprise factor, and the immediate market reaction is typically limited. However, the decline compared to the previous period shifts medium-term investor expectations regarding monetary policy and bond yield dynamics, which already affects the valuation of Japanese equities.

For the JP 225 index, this news appears broadly neutral. Slower inflation reduces the likelihood of accelerated tightening by the Bank of Japan and lowers the risk of a sharp rise in domestic bond yields. Softer rate expectations are generally supportive for equity valuations, as the cost of capital declines and financial assets become more attractive relative to risk-free instruments.

JP 225 technical analysis

The JP 225 index maintains its upward momentum. The key support level is located at 56,475.0, while the nearest resistance level at 58,520.0 has been broken. The current rise is medium-term, with no signs of a reversal so far. The next target could be 61,825.0.

The JP 225 price forecast considers the following scenarios:

• Pessimistic JP 225 scenario: a breakout below the 56,475.0 support level could push the index down to 54,165.0
• Optimistic JP 225 scenario: if the price consolidates above the previously breached resistance level at 58,520.0, the index could climb to 61,825.0

Summary

The data is rather neutral for the JP 225 and the Japanese equity market overall: inflation is moving towards a more sustainable level, and the risks of rapid policy tightening are diminishing. At the same time, the index’s further trajectory will largely depend on the yen’s exchange rate, expectations regarding Bank of Japan actions, and corporate earnings results, as these factors will determine which sectors benefit most from softer financial conditions. The next upside target for the JP 225 stands at 61,825.0.

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