Bank gains and golden cross support Nikkei's advance

2026-08-12

Downside held firm despite Middle East caution

Japan's Nikkei Stock Average extended gains on the Tokyo Stock Exchange on the 12th, ending at 67,524.06, up 553.84 points, or 0.83%, from the previous trading day. The market stayed resilient even as oil prices rose on concerns over the Middle East situation. On the daily chart, it formed a so-called golden cross, a buy signal that helped support investor sentiment.

Buybacks in bank shares

The morning session lacked direction, reflecting the summer lull in the market. Caution over the Middle East situation capped gains. Rezaei, secretary-general of Iran's Supreme National Security Council, which oversees defense and foreign affairs, was reported to have said on the 11th that the blockade of the Strait of Hormuz would not be lifted unless the United States changed its behavior and accepted Iran's conditions for ending the fighting.

Still, on the 12th the 5-day moving average crossed above the 25-day line and also rose above the 75-day line. The 5-day line crossing both the 25-day and 75-day lines at the same time was the first since the artificial intelligence and semiconductor rally in early April.

Rate-hike expectations broaden buying

Banking stocks stood out for strong buying interest. Major names including Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group drew purchases, while Fukui Bank rose 5.0% and Chiba Bank gained 2.7%.

Views are spreading that the pace of rate hikes may accelerate, following the Bank of Japan's release on the 10th of the 'main opinions' from its July monetary policy meeting. Daiki Takei, strategist at Resona Holdings, said rising rate-hike expectations are strengthening hopes for earnings growth at bank stocks. Mizuho Bank announced on the 10th that it would raise its long prime rate, a benchmark for lending rates to large companies, from August.

In the BOJ's preliminary July money stock data released on the 12th, the average outstanding balance of M3 rose for the first time in two months. Supported by stronger bank shares, the Tokyo Stock Price Index gained 0.9%. Nomura Securities raised its year-end 2026 forecasts for both the TOPIX and the Nikkei. Hiroyuki Ueno, chief strategist at Sumitomo Mitsui Trust Asset Management, said earnings from Japan and the United States have now been digested and solid fundamentals are helping broaden buying across sectors.

If July US consumer price index data released on the 12th come in strong, expectations for further rate hikes by the Federal Reserve could rise again, testing the market's durability.

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