The United States is about to enter a cycle of interest rate cuts, while Japan has just entered a cycle of interest rate hikes. The United States is about to enter a cycle of interest rate cuts, which means that the U.S. economy is about to enter a recession. If the Bank of Japan does not raise interest rates, the Japanese economy will not be able to catch up with the pace of the new round of world economic recovery in the future. Therefore, Japan's interest rate hike this time is not a simple short-term market adjustment, but a cyclical interest rate hike, which will have a certain amplitude.
The cyclical interest rate hike initiated by the Bank of Japan will have a significant impact on the Japanese economy from the perspective of the domestic economy. Before the Bank of Japan initiated this cyclical interest rate hike, the Japanese stock market was also at an extremely high level. The Bank of Japan is likely to complete this cyclical interest rate hike in the short to medium term, and the pace of interest rate hikes will be relatively fast. Under the impact of the Bank of Japan's cyclical interest rate hike expectations and the rapid pace of interest rate hikes, the Japanese stock market, which is at an extremely high level, will naturally suffer a major blow.
From the perspective of the yen exchange rate, the cyclical interest rate hikes initiated by the Bank of Japan are in stark contrast to the Fed's expectations of rate cuts, and there is a strong expectation of yen appreciation in the short term, especially at the low level of yen depreciation. The rapid appreciation of the yen is likely to trigger a sell-off in the Japanese stock market, which is at an extremely high position. Moreover, under the influence of the Bank of Japan's interest rate hike and the expectation of Japan's economic recession, there will still be a strong expectation of depreciation of the yen after a short-term appreciation. This will bring great pressure to the Japanese stock market.
The impact of the yen exchange rate, the Bank of Japan's periodic interest rate hikes on Japan's economic recession, and the Bank of Japan's faster pace of interest rate hikes will all have a significant impact on the Japanese stock market. In order to reduce the selling pressure on the Japanese stock market, the Japanese stock market can only choose to plummet, locking up the capital in the stock market, especially foreign capital.
The Nikkei index may not stabilize until it reaches around 28,000 points, and will fall to 23,400 points in 2025. Japan has no future, and the Japanese stock market has no future. 42,426 points will definitely be another super top for the Japanese stock market for at least 30 years.