Live Markets: Japan's Nikkei seen nearing near-term peak?

STMicroelectronics NV

02/06/2026 10:36

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JAPAN'S NIKKEI SEEN NEARING NEAR-TERM PEAK? 
Japan's Nikkei 225 .N225 rose 12% last month after a 16% rise in April, but Citi believes Japanese equities could be hitting their peak in the near-term before resuming upside towards the end of the year. 
Supporting factors have included hopes for a U.S.-Iranian peace agreement and peak in crude oil prices, AI and semiconductor boom, and earnings guidance remaining at normal levels of conservatism, according to Citi. 
"Given that not only the Nikkei 225, driven by the tech boom, but also TOPIX recently hit YTD highs, and that earnings revision deterioration is expected in the immediate future, Japanese equities may peak for a while in the short term," Citi equity strategist Ryota Sakagami says. 
But that doesn't change their overall bullish long-term outlook for Japanese stocks. 
"We think the overall potential for growth toward the end of the year remains strong," Sakagami says, adding that valuations still have room to rise due to improving margins in the current inflationary environment.
Citi sets their TOPIX target at 4,500 and expect the Nikkei 225 to break above 70,000 by year-end, implying about 5% upside from current levels. 
(Samuel Indyk)
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EARLIER ON LIVE MARKETS: 
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