US Trade Agreement Drives Japanese Stocks to Historic High! Analyst: Japan's Stock Market Rally Triggers Memories of the 2024 Crash, Needing Vigilance Against August Last Year's Situation

Glodon July 25th | After the US trade agreement drove Japanese stocks to historic highs, this rally has pushed some market indicators close to levels seen before last year's crash. "When the market is rising so rapidly, I think it's indeed necessary to be vigilant about the situation in August last year," said Arakawa Hisashi, a senior stock manager at abrdn Japan Co., Ltd. "This round of market sentiment may not be driven by the Japanese yen, but I'm closely monitoring price levels from last summer." In August last year, unexpected interest rate hikes by the Bank of Japan combined with hawkish remarks from its governor and economic concerns in the US triggered a sharp decline in Japanese stocks. Despite the central bank's successful policy rate hike, it failed to repeat the previous downturn. The current macro environment has changed – US tariff policies have become the main driving force for the market. However, some technical indicators show that the Nikkei 225 Index is now presenting a fragile state similar to what was seen before last year's crash. On Thursday, the Nikkei 225 Index reported an RSI of 79 on Friday, which has broken through the overbought warning line – this indicator was also in this range just under a month before last July's crash.