Nikkei 225’s Bullish Reversal Extends Towards New All-Time Highs
By Kelvin Wong | 16 April 2026
Key Takeaways
- Ceasefire Optimism: Improved prospects for a US-Iran ceasefire have boosted market sentiment, leading to a strong recovery in the Nikkei 225 despite ongoing stagflation concerns.
- Macro Support: The bullish steepening of Japan's yield curve indicates easing growth fears, historically correlating with equity performance, thus reinforcing a positive outlook for the Nikkei.
- Uptrend Momentum: The Nikkei 225 has rallied approximately 18% from late-March lows and is nearing all-time highs, with potential for further gains if key support levels hold.
Market Context
The current optimism surrounding a potential US-Iran ceasefire has invigorated the Japanese stock market, even amidst challenges such as the blockage of the Strait of Hormuz affecting global oil supply, which raises stagflation risks. Recent negotiations between the US and Iran have not escalated tensions but rather suggest a compromise, with talks of extending the ceasefire deadline to allow for further negotiations.
Nikkei 225 Performance
Since the onset of the US-Iran conflict, the Nikkei 225 experienced a decline of 13% from its high on February 27, 2026, reaching a low of 50,395 on March 30, 2026. However, recent trading sessions have seen a recovery, with the index now only marginally down by 1.2% from late February.
Yield Curve Analysis
The Japanese Government Bond (JGB) yield curve has shown a bullish steepening, with the 2-year yield declining more sharply than the 10-year yield. This trend supports a bullish outlook for the Nikkei 225, as both have historically moved in tandem since June 2022.
Technical Analysis
The Nikkei 225 is currently oscillating within a minor ascending channel, approaching an intermediate resistance level of 59,890/60,075, which coincides with the all-time high from February 26, 2026. Key support levels to watch include 57,830/57,274, which are crucial for maintaining bullish momentum. A break below 57,274 could lead to a corrective decline, exposing further support levels.
Conclusion
Overall, the near-term outlook for the Nikkei 225 remains bullish, supported by positive price actions above key moving averages and favorable momentum indicators. The market is poised for potential gains if current support levels hold.