Insights 
Key Points:
- Nikkei closes at 37,503.33, up 1.56%, notching fourth straight weekly gain.
- Optimism builds ahead of weekend U.S.-China talks; Topix rallies for 11 consecutive sessions.
Japan’s Nikkei 225 closed at its highest level since 27 March, 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—its longest run since October 2017. Renewed risk appetite drove the rally, following Thursday’s announcement of a limited trade agreement between the United States and the United Kingdom.
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—currently at 145%—could be reduced.
Traders took the developments as a turning point in April’s 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.
Technical Analysis
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.
Cautious Outlook
Markets will turn their attention to Saturday’s U.S.-China talks for confirmation of trade thaw. 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 Nikkei’s next hurdle lies near 38,000, with short-term support forming around the 36,800–36,900 zone.
