Highsight Cuts Nikkei 225 Targets by 16.7% Amid Trade Uncertainty

Highsight has revised its target for the Nikkei 225 index, lowering its three-month target to 2,500 points from the previous 3,000 points and its 12-month target to 2,775 points from 3,100 points. This adjustment comes in response to increased uncertainty in trade policies and growing concerns about the economic outlook.

The firm's analysts, including Kazunori Tatebe, cited the heightened unpredictability in global trade policies and worsening economic prospects as the primary reasons for the downward revision. The market has experienced significant volatility, with the Nikkei 225 index dropping by 9% in a single day, marking its largest single-week decline in five years. This sharp decrease is attributed to escalating trade tensions and subsequent market panic.

The financial sector has been particularly hard hit, with the Nikkei Financial Index plummeting by 14.7%. The actual effective tariff rate has surpassed initial estimates, reaching 18.8% compared to the previously anticipated 15%. This discrepancy has further exacerbated market concerns and contributed to the downward revision of the index targets.

The broader market sentiment has become increasingly pessimistic due to ongoing trade disputes and their potential impact on global economic growth. Highsight's analysts have highlighted that the market's reaction to trade policies and economic concerns has been swift and severe, leading to significant losses for investors. The current market environment is characterized by heightened volatility and a lack of clear direction, making it challenging for investors to navigate the uncertain landscape.

Despite the current market turmoil, Highsight maintains that the Nikkei 225 index could see a rebound in the medium term if the U.S. economy avoids a recession. However, the firm warns that the market may continue to experience significant volatility in the short term, with the potential for further declines in the index. Investors are advised to remain cautious and closely monitor developments in trade policies and economic indicators.