The Tokyo stock market on the 26th will focus on whether the Nikkei Stock Average, which rose 328.34 yen the previous day, can extend its gains. In overnight U.S. trading, all three major indices advanced and crude oil futures prices fell sharply. While the combination of rising U.S. stocks and falling oil prices supports investor sentiment, uncertainty surrounding the Middle East situation remains entrenched, and the battle over reclaiming the key 66,000 level is likely to be a focal point.
In U.S. equity markets on the 25th, the Dow Jones Industrial Average closed at 53,577.40, up 160.24 points from the previous day. The tech-heavy Nasdaq Composite rose 171.10 points to 26,151.29, and the S&P 500 gained 24.42 points to 7,677.28, with all three major indices advancing in tandem. Buybacks emerged in some major tech names that had led the sell-off the previous day, while declining long-term U.S. Treasury yields provided an additional tailwind for equities.
Meanwhile, crude oil futures markets saw notable sharp declines. On the New York Mercantile Exchange on the 25th, the benchmark WTI (West Texas Intermediate) front-month contract settled at $82.36 per barrel, down $2.65 (3.1%) from the previous day. Brent Crude Oil Futures also fell $3.59 (3.9%) to $88.58 per barrel, with both benchmarks sinking to their lowest levels in a week.
Behind the oil price decline is the market’s measured response to the U.S. administration’s sanctions against Iran. While the U.S. government signaled its intention to intensify economic pressure on countries trading with Iran, it did not specify which countries would be targeted or when sanctions would take effect. Market participants broadly assessed that this economic pressure poses a more limited risk to crude oil supply compared with escalating military tensions, leading supply concerns to recede for the time being.
The decline in crude oil prices is a positive factor for the Japanese economy, which relies heavily on imports for its energy resources, as it eases import cost burdens and alleviates concerns over rising prices. The combination of rising U.S. equities and falling oil prices is likely to be viewed as a factor underpinning the Tokyo market on the 26th.
That said, uncertainty over the trajectory of U.S. policy toward Iran and geopolitical risks in the Middle East themselves have not been resolved. A cautious stance persists in the market, with participants seeking to continue assessing developments in oil prices and overseas conditions, leaving the sustainability of any upside momentum unclear.
In the foreign exchange market, as of 6:20 a.m. on the 26th, the dollar-yen exchange rate is trading around 159.206 yen per dollar. The distance from the previous day’s close of 65,856.43 to reclaiming the 66,000 level is 143.57 points. With profit-taking following the previous day’s gains also in focus, attention is centered on how the Nikkei will trade.