Japan’s Nikkei 225 is forecast to climb about 5% by the end of 2025, reaching 39,600, as U.S. trade policy uncertainties begin to clear, according to a Reuters poll of 17 equity strategists conducted from May 15 to 27. The index closed at 37,724.11 on Tuesday. Looking further ahead, analysts predict the Nikkei will hit 40,875 by mid-2026 and rise to 42,000 by year-end—an 11.33% gain.
Three analysts expect the Nikkei to surpass July’s all-time high of 42,426.77 by mid-2026, with two forecasting it to do so by year-end. Tony Sycamore from IG anticipates the index will close 2025 at 40,000 and surge to a record 44,000 in 2026, citing favorable fundamentals like a weak yen, low interest rates, and strong corporate earnings.
The Nikkei has experienced volatile swings since peaking, dipping into bear territory by August before rebounding, only to fall nearly 20% again on renewed tariff fears under Donald Trump’s policies. The yen, despite recent appreciation, remains historically weak—benefiting Japanese exporters by enhancing overseas revenue.
The Bank of Japan’s gradual rate hikes, starting from ultra-low levels, have also contributed to market uncertainty. Oxford Economics’ Norihiro Yamaguchi remains cautious, predicting the Nikkei will only reach 38,900 by end-2026, citing lingering global trade risks.
While most analysts do not expect a significant market correction, they remain split on corporate earnings forecasts for 2025. Greater clarity on trade policy, especially following Trump’s surprise tariff moves, is seen as essential for confident market projections. Nomura revised its earnings forecast from +7% to -3% after recent developments with China and a temporary pause in new tariffs.


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