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Japanese stock markets reached their highest levels since 1990, with the Nikkei 225 Index rising by 0.9% and the broader Topix Index gaining 0.66%.

• The weaker yen and loose monetary policy have boosted earnings for Japanese companies.
• Advantest, Tokyo Electron, Japan Tobacco, Nintendo, and SoftBank Group were among the index heavyweights that experienced notable gains.
• Tokio Marine Holdings announced a 5.7% jump in its stock after announcing a share buyback worth 50 billion yen.
• Machinery orders in Japan unexpectedly declined in March, potentially impacting capital spending in the next six to nine months.
• Japanese inflation exceeded expectations, with the headline rate reaching 3.5% in April and core inflation rising to a three-month high of 3.4%.
• The Japanese yen stabilized around 138 per dollar, pausing its recent decline, influenced by stronger-than-expected domestic inflation data.
• Growing optimism over US debt ceiling negotiations and hawkish signals from the Federal Reserve weighed on the yen, which remains near six-month lows.
• US President Joe Biden and House Speaker Kevin McCarthy expressed confidence in averting a US default, while Federal Reserve officials rejected speculations of interest rate cuts this year.

In recent days, the Nikkei 225 Futures (USD) have been trading in an imbalanced manner above the developing value areas for the year, quarter, and month. However, during today’s session, buyers emerged around a prior VWAP close level, displaying absorption behavior that propelled the market to surpass previous highs.

During the past week, the market exhibited a balanced price range, giving traders the opportunity to target the mean or extremes as they considered adding to core long positions. Notably, absorption around the current highs suggests the possibility of a pullback. The supportive monetary policy in place, which has attracted foreign investors to Japanese stocks, is also bolstering the stock market.

2 Months Ago

At the end of the session, the market showed a double distribution volume profile, with the low volume area serving as a potential target for long positions. Meanwhile, the point of control (POC) acts as a crucial level of support in the market, providing guidance for traders.

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