Japanese Stock Market: The Bull vs. Bear Tug‑of‑War
After last Monday’s circuit‑breaker, the NKY225 fought its way back toward the 35,000 level. The bulls are dust‑offing, but I’m still convinced the market is on a bearish road.
Why the Ju-Stock Jumps Might Be Short‑Lived
- US economic slowdown – The looming U.S. recession scare is pulsing through the market.
- Yen Carry‑Trade unwind – Investors are pulling out of the yen, making it stronger. A stronger yen means a heavier hand on Japanese stocks.
- Speculation that Japan’s monetary tightening will persist while the Fed must cut rates soon to keep the market from skidding.
- As the U.S.–Japan interest‑rate gap narrows, the yen gains ground, squeezing Japanese shares.
One‑Time Wage Boost?
June’s real wages up 1.1 % YoY gave consumer confidence, and the stock index gave a quick bump. But it’s a one‑off; unless the data keeps improving, yen strength will keep tightening the squeeze on the NKY225.
Volatility is Still a Wildcard
Even though the NKY225 VIX fell from a wild 70 % to a still‑high 50 % after Monday, remember that the VIX usually lives between 16 % and 23 %. High volatility means the market can swing wildly without any big rumors. It’s tough to tell the direction of the trade in these volatile tides.
Deciding Not to Scale Up Yet
Given the bearish signals, I’m holding back on adding more positions—for now. The market feels like a seesaw with a heavy weight on one side, and the data‑driven tilt remains uncertain.
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