In a reversal of fortune, Nikkei 225 has now fallen to the bottom, becoming one of the worst-performing stock indices, with a loss of 9.2% recorded from February 28, 2026, to April 6, 2026 (see Fig. 1).
Japan is a major oil importer, and the current US-Iran war, which is entering its 39th day, is not showing any clear signs of de-escalation at this juncture. Iran rejected a ceasefire deal yesterday after US President Trump’s latest deadline demand due today, Wednesday, 7 April at 8.00 p.m. Eastern time for Iran to open the Strait of Hormuz before US strikes on Iranian energy plants and key infrastructures.
Benchmark crude oil prices continue to trade firmly above $100/barrel, and trend-following market participants may trigger a bullish herding behaviour to continue bidding up the prices of oil.
The West Texas crude oil may rally towards the next intermediate resistances of $124.40 and $131.30/132.67.
Read more: Chart alert: WTI crude oil whipsawed above 20-day MA ahead of Trump’s speech and US-Iran ceasefire hopes
Hence, further rallies in oil prices above $100/barrel increase the stagflation risk narrative, in turn, triggering a negative feedback loop into the Japanese economy, creating further bearish sentiment in the Nikkei 225.
In addition, the Citigroup Earnings Revision Index for Japan has slipped to a 5-month low of 0.16 as of 27 March 2026 from 0.42 printed on 6 March 2026, suggesting that sell-side analysts on average are less optimistic about the Japanese corporate earnings outlook (see Fig. 2).
Let’s now look at the technical factors to determine Nikkei 225’s potential short-term trajectory (1 to 3 days).
#Chart #alert #Japans #Nikkei #flashing #bearish #breakdown #conditions #50day