The Nikkei 225 Index remains in a bull run, helped by numerous catalysts from Japan and other countries. It was trading at ¥49,300 on Friday, and odds are that it will keep soaring this week. It has jumped by 60% from its lowest point this year. Here are the key catalysts for Japanese stocks this week.

Nikkei 225 Index to react to US and China deal

The main catalyst for the Nikkei 225 Index is the rising hopes that the US and China will ink a trade deal this week. In separate statements, officials from the two countries confirmed that they were close to a deal. 

Scott Bessent hinted that China agreed to start buying vast amounts of soybeans from the US. He also said that China agreed to extend the rare earth export controls by 12 months as negotiations start. He said:

“So I would expect that the threat of the 100% has gone away, as has the threat of the immediate imposition of the Chinese initiating a worldwide export control regime.”

Bank of Japan interest rate decision 

The other catalyst for the Nikkei 225 Index is the upcoming Bank of Japan (BoJ) interest rate decision. This decision will come a week after a report by the statistics agency said that the country’s inflation rose for the first time since May.

The headline CPI rose to 2.9%, higher than the median estimate of 2.7%. Core inflation also jumped to 2.9% during the month.

Still, Wall Street analysts believe that the BoJ will leave interest rates unchanged, which will benefit Japanese stocks. However, some believe that the bank will hike rates in the December meeting. In a note, UBS analysts said:

“The BOJ should hike this time in principle, but markets factoring in only a narrow chance of a move will make the bank hesitant. The focus is on how much they will signal a chance of moving in December.”

Federal Reserve interest rates decision

The other important catalyst for the Nikkei 225 Index will come out on Wednesday when the Federal Reserve cuts interest rates by 0.25%. Odds of a Fed cut rose after the US released the relatively muted inflation data. 

The report showed that the headline Consumer Price Index rose from 2.9% in August to 3.0% in September. Core inflation, which strips the volatile food and energy prices, fell to 3.0%. In note, analysts at ING said:

“Upside inflation risks are receding while worries about the jobs market are mounting. The Federal Reserve is expected to respond with another 25bp interest rate cut on Wednesday, and could also bring QT to a conclusion.”

Key Japanese earnings

The other key catalyst for the Nikkei 225 Index will be results by some of the biggest constituent companies. Canon will publish its numbers on Monday, while Advantest and Nomura will release their results on Tuesday. 

Meanwhile, Komatsu, Central Japan, Tokyo Gas, and Japan Exchange Group will release their numbers on Wednesday. The other key results from Hitachi, Japan Tobacco, Fujitsu, Takeda, and Panasonic will be published on Thursday.

The Nikkei 225 Index will also react to the upcoming US big tech companies like Microsoft, Apple, and Microsoft. 

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