Nikkei Near Highs as AI Strength Offsets Oil Risk

Key Takeaways

• The Nikkei stayed near record levels as AI-linked stocks continued to support sentiment
• Wall Street strength and tech momentum helped offset renewed geopolitical noise
• Oil risk remains a key threat for Japanese equities because of Japan’s reliance on imported energy
• The index is still in an uptrend, though short-term momentum has started to soften

Japanese equities remained close to the top of their recent range as traders continued to give more weight to AI momentum and earnings support than to the latest swings in Middle East headlines. Even after pulling back from the intraday peak, the Nikkei stayed near the record zone, showing that buyers are still willing to stay involved rather than exit quickly on every geopolitical setback.

The market is balancing two different forces. In the short term, Iran-related headlines and renewed Hormuz tension are creating volatility. Over the medium term, support from global tech leadership, resilient earnings and broad AI demand is helping keep the Nikkei elevated.

AI demand keeps supporting the index

The strongest support continues to come from AI-linked and heavyweight tech names. Stocks such as SoftBank and Lasertec remained key drivers, reflecting the broader theme that has been supporting Japan’s market for months.

This matters because the strength is not limited to just one stock or one sector. When AI optimism supports chip names, large-cap index leaders and expectations for future earnings, the Nikkei tends to have a stronger base and becomes less vulnerable to short-term shocks.

Oil risk still limits upside

Wall Street has also helped reinforce that tone, with the S&P 500 and Nasdaq recently closing at fresh record highs. That has supported Japanese equities, especially the tech-heavy and AI-linked parts of the market.

At the same time, renewed US-Iran tension and disruption around the Strait of Hormuz have pushed oil higher again. Since Japan relies heavily on imported energy, crude prices matter more for the Nikkei than for many other equity markets. If oil remains controlled, traders can keep focusing on AI and earnings. If crude climbs sharply again, the market may shift back into a more defensive phase.

Key levels remain in focus

The Nikkei 225 traded at 58,836.15, down 853.90 or 1.43%, after reaching 59,201.15. The cash index previously closed at 58,824.89, while the Topix ended at 3,777.02.

From a technical perspective, the broader trend remains bullish, but near-term momentum has softened. Support is seen at 58,000, followed by 57,750 and 55,350. Resistance stands at 59,000, then 60,077 and 61,000. Traders are now watching whether support around 58,000 holds or whether the pullback extends before buyers step back in.

Dive into the full market view on AI strength, oil pressure and the Nikkei’s next test in this article.