JP 225 resumes decline: index falls more than 6%

The JP 225 fell by more than 6%, but the broader trend remains bullish, with a weaker dollar supporting stocks.

JP 225 forecast: key takeaways

• Japan’s GDP grew by 0.3% in Q2 2026, falling short of a forecast of 0.5%
• The data has a moderately negative impact on the JP 225

JP 225 fundamental analysis

Japan’s GDP growth in Q2 2026 came in below expectations: real GDP increased by 0.3% quarter-on-quarter, missing expectations for 0.5%, while growth in the previous quarter was 0.5%. On an annualised basis, the economy expanded by approximately 1.1%. However, the composition of the data looks less favourable than the positive GDP figure itself: domestic demand contributed around −0.2 percentage points, while net exports added approximately +0.5 percentage points.

For the JP 225, these figures are initially a moderately negative factor, as they point to slowing economic activity and weak domestic demand. The decline in corporate investment is particularly important: the stock market may perceive this as a sign that Japanese companies are becoming more cautious about expanding production and capital expenditure.

JP 225 technical analysis

The JP 225 stock index dropped by more than 6%. However, the broader trend remains bullish. The resistance level has formed at 69,540.00, while support is located at 64,830.00. Only a breakout below the latter would signal the start of a downtrend. If the uptrend continues, the upside target could be 71,975.00.

The JP 225 price forecast outlines the following scenarios:

• Pessimistic JP 225 scenario: a breakout below the 64,830.0 support level could send the index down to 60,440.0. Recommended Stop-loss: 64,930.0
• Optimistic JP 225 scenario: a breakout above the 69,540.0 resistance level could propel the index up to 71,975.0. Recommended Stop-loss: 71,875.0

Expiry date: 27 August 2026

Summary

The GDP release should be viewed as moderately negative for the Japanese economy, but not unequivocally negative for the JP 225. Weak growth, the lack of a noticeable increase in consumption, and a decline in corporate investment may limit the market’s upside potential and weigh on domestically focused companies. However, the data may also reduce the likelihood of rapid monetary policy tightening by the Bank of Japan and put pressure on the yen. Technical analysis of the JP 225 suggests a rise towards 71,975.0.

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