Nikkei 225 Forecast: Tokyo Electron Rally Offsets SoftBank Losses

Published: June 04, 2026

Key Points

• The Nikkei 225 index experienced a decline due to broad market weakness and significant losses from SoftBank.
• Despite the overall downturn, semiconductor stocks, particularly Tokyo Electron, showed resilience, indicating ongoing investor confidence in Japan's AI sector.
• The index remains bullish, but a drop below key support levels could lead to a deeper correction before any potential rally.

Market Overview

The Nikkei 225 fell on Thursday, driven by widespread selling pressure across various sectors, particularly paper and pulp, transport, and communication stocks. The number of declining stocks on the Tokyo Stock Exchange outnumbered those that rose, reflecting a cautious sentiment among investors. Notably, SoftBank Group's stock plummeted over 11%, with other companies like Ibiden and Toppan Printing also suffering losses exceeding 10%.

In contrast, semiconductor and industrial stocks performed well, with Tokyo Electron reaching an all-time high, showcasing that the AI theme continues to bolster investor sentiment even amid a challenging market environment.

Technical Analysis

The Nikkei 225 is currently correcting towards a support line near 67,000. If it breaks below this level, it could fall to around 66,200, where a previous V-shaped pattern was observed. The more critical support level is at 63,800, which is essential for maintaining the short-term bullish trend.

Since hitting lows around 50,000 in March 2026, the Nikkei 225 has shown a strong bullish trend, compressing within tight ranges during its rally. However, the recent resistance levels between 67,000 and 68,000 have led to a key reversal, indicating a potential correction phase.

Tokyo Electron's Performance

Tokyo Electron has been a standout performer, gaining significantly in recent months. The stock has shown a parabolic move since March 2020 and is currently trading within an ascending broadening wedge pattern, indicating high volatility. In April and May 2026, the stock gained 19.23% and 18.09%, respectively, and has continued its upward trajectory into June with a 21.44% increase over just three days.

Conclusion

While the Nikkei 225 remains in a bull market, the recent sell-off suggests profit-taking among investors. The short-term outlook is uncertain due to overall market weakness and significant losses in SoftBank. However, the strength of semiconductor stocks, particularly Tokyo Electron, indicates that the AI theme is still a driving force in Japan's market. Key support levels between 60,000 and 63,800 will be crucial in determining the index's next moves, especially if corrections in Tokyo Electron occur, which could introduce volatility in the Nikkei 225.