Nikkei 225 Forecast: Trump-Xi Trade Hopes and Tech Rally Point to 65,000

The Nikkei 225 shows positive momentum on Thursday as investors await the Trump-Xi meeting in Beijing. The Nikkei 225 index has broken the record levels in May while the Topix remains below the February 2026 highs that reflect a split tone within Japan’s stock index.

The buyout of large-cap and export oriented companies points to continued support for those stocks but there is a lack of confidence in any definitive guidance regarding U.S.-China trade. If the tariff, rare earths, or semiconductor restrictions are agreed upon in a narrow format, it will benefit Japanese manufacturers and exporters.

The overall regional outlook further supported the sentiment. The Hong Kong and mainland Chinese stocks rose, while South Korean tech stocks are recovering from Samsung’s bounce. This impacted the Nikkei 225 due to the strong ties between Japan’s market and the Asian tech cycle.

An appreciating yuan and positive performance of Chinese equities could help to boost risk appetite in the region. It could also benefit Japan’s companies that are on the receiving end of demand from China such as manufacturers of industrial supplies and semiconductor equipment.

The downside could be limited if the Trump-Xi meeting only yields a small tactical deal. The talks will likely be about trade, export controls, tariffs, rare earths and semiconductors, rather than a reset in relations.

Record levels of high inflation data will continue to put pressure on global yields. But support comes from strong Wall Street technology gains and its best performance in the S&P 500 and Nasdaq. The Nikkei 225 could keep the positive momentum if the trade tensions ease. But any disappointment at the summit could trigger profit taking in the Nikkei 225.

Nikkei 225 Technical Analysis: Price Compression Points to Upside Breakout

The 4-hour chart for Nikkei 225 shows strong consolidation between 61,800 and 63,800. These consolidations indicate positive price action. This positive price action will likely trigger another move higher if it breaks above 63,800.

A break below 61,800 will likely push the index towards 60,000. However, based on the formation of the cup pattern and price compression pattern, the next move in Nikkei 225 will likely be higher.

This bullish price action is also evident on the daily chart. The chart shows the formation of a sharp wick on Tuesday’s candle.

After forming the key reversal on Tuesday, the price rebounded and closed higher on Wednesday. This higher close indicates positive price action in Nikkei 225 for the next few sessions. A break above 63,800 will likely push the index towards the 65,000 area.

The chart below shows that the Renesas Electronic Corporation, NTN Corporation and TDK Corporation continued to surge within a parabolic trend. This surge indicates strong demand in semiconductor, electronic components and industrial manufacturing sectors.

Bottom Line

On a closing note, the Nikkei 225 was well supported by regional optimism, Wall Street’s tech rally and optimism for a positive outcome of the Trump-Xi meeting. A narrow trade agreement would benefit Japanese exporters, manufacturers and semiconductor stocks. But if there is a lack of enthusiasm at the summit, inflation expectations or hikes in global yields could encourage market participants to take profits over the short term. Technically, the index is bullish as long as it is above 61,800. If it breaks above 63,800, the possibility of moving towards 65,000 in the next few sessions will increase.