Nikkei slips as foreign buying rises and BoJ hike odds surge

The Nikkei 225 dropped to 64,717 on Thursday, down 11.2% from its peak earlier this year. Foreign investors bought more than ¥690 billion of Japanese equities, reversing a week of net selling, and purchased over ¥111.9 billion of Japanese bonds. Polymarket placed the probability of a Bank of Japan rate hike at 98% for the Sept. 18 meeting. Japan’s headline consumer price index rose 1.9% in July, up from 1.6% in June.

Oil prices rose, with Brent crude above $101 and West Texas Intermediate trading past $97, driven by tensions in the Middle East. Higher energy costs coincided with the rise in Japan’s inflation readings. The yen strengthened sharply this month: the USD/JPY rate fell from about 163.96 in July to roughly 153 on Thursday as markets priced a narrower interest-rate gap between the United States and Japan.

Foreign investors bought shares after net selling of ¥35 billion the previous week. Major listed firms showed mixed moves: Mitsubishi UFJ Financial Group gained 1.83%, SoftBank Group fell 0.68%, and exporters including Kioxia and Tokyo Electron dropped more than 0.5%.

On technical charts, the Nikkei has declined from a June high of 72,842 and slipped below its 50-day exponential moving average and the upper band of a trading range identified by Murrey Math Lines. The index has formed a symmetrical triangle pattern with converging trendlines. Momentum indicators such as the Relative Strength Index and MACD are trending lower. Traders identified the Major S/R pivot at 62,500 as an initial support level; the next reference point below that is 60,000. A rise above the triangle’s upper boundary would be noted as a technical break to the upside.

The economic calendar ahead includes Japanese producer price data and U.S. consumer inflation figures, both due about a week before Federal Reserve and Bank of Japan policy meetings. Those scheduled releases will coincide with the run-up to central bank decisions.