The Japanese stock market index, Nikkei 225, closed at its highest level since 27 March 2025, gaining 1.56% on Friday to end the session at 37,503.33. The move capped a strong week, with the index climbing 1.83% over the shortened holiday stretch and marking four straight weeks of advances.
The broader Topix index surged 1.29% to 2,733.49, logging an 11-session winning streak and marking its longest run since October 2017.
Renewed risk appetite drove the rally, following the announcement of a limited trade agreement between the United States and the United Kingdom on Thursday.
Although U.S. President Donald Trump confirmed that existing 10% tariffs on British exports would remain in place, markets welcomed the agreement as a signal of easing protectionist pressure. Optimism extended toward the upcoming U.S.-China trade negotiations in Switzerland, where Trump suggested punitive tariffs on Chinese goods could be reduced from the current 145%.
Traders took the developments as a turning point from the April slump. “The environment not just for equities but for bonds is only getting better as more compromises on trade talks could be possible,” said Hiroyuki Ueno, chief strategist at Sumitomo Mitsui Trust Asset Management.
Japanese equities also found relief in improving earnings sentiment. Despite tariff concerns, firms like Toyota appear insulated from worst-case scenarios, easing investor fears of corporate damage.
The Nikkei225 has extended its upward momentum after rebounding from the low of 36,553, climbing steadily to challenge the 37,653 resistance level. The index is now consolidating just below that key high, with short-term moving averages (5, 10, and 30) trending upward and providing dynamic support. Price action remains bullish overall, with higher lows forming on each intraday dip.
Picture: Nikkei225 edges toward 37,653 peak as momentum firms, as seen on the VT Markets app
The MACD histogram has flipped back to green after a brief contraction, and a bullish crossover appears to be forming again above the zero line, which could strengthen the case for another test of the recent high. However, unless 37,653 is broken decisively, the current rangebound pattern between 37,250 and 37,650 may continue to dominate the near-term.
Markets will turn their attention to the U.S.-China talks for confirmation of trade thaw this Saturday. A positive outcome could fuel further gains for equities in Asia and globally. However, traders should brace for volatility if talks stall or fail to deliver concrete tariff relief. The next hurdle for Nikkei lies near 38,000, with short-term support forming around the 36,800 – 36,900 zone.
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