Summary

• Ceasefire optimism driving rebound: Improving prospects of a US–Iran ceasefire and reduced escalation risks have lifted sentiment, fuelling a strong recovery in the Nikkei 225 despite lingering stagflation concerns.
• Macro support from JGB yield curve steepening: Bullish steepening in Japan’s yield curve signals easing growth fears and has historically moved in tandem with equities, reinforcing the bullish outlook for the Nikkei.
• Uptrend gaining momentum near record highs: The index has rallied ~18% from late-March lows and is approaching all-time highs, with further upside likely if key support holds, while a break below support may trigger a short-term pullback.

By Kelvin Wong

The current US-Iran ceasefire optimism, which is now translating into a higher chance of a peace deal, has ignited the bulls in the Japanese stock market despite the ongoing blockage of the Strait of

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