Strategists see near-term consolidation for the Nikkei before earnings growth and foreign inflows drive a break above 60,000 by 2027.
Summary:
Nikkei seen at 57,500 by mid-2026
Forecast lifted from November poll
60,750 projected by mid-2027
Foreign inflows accelerating
AI theme supportive but selective
Correction risk viewed as limited
Japan’s Nikkei 225 is expected to trade largely sideways in the near term before resuming its upward trajectory and breaking through the 60,000 milestone by mid-2027, according to a Reuters poll of equity strategists.
The benchmark, which has risen more than 13% year-to-date, recently touched a record intraday high above 58,000 following Prime Minister Sanae Takaichi’s landslide snap election victory. Strong corporate earnings and expectations of supportive fiscal policy have underpinned sentiment, helping lift the median mid-2026 forecast to 57,500, up modestly from current levels but significantly higher than projections made late last year.
While analysts see limited upside through June, they broadly anticipate a period of consolidation rather than a meaningful pullback. The rapid advance in recent months has heightened valuation concerns, but strategists expect time, rather than price weakness, to ease stretched conditions. By end-2026, the index is seen approaching 58,500, before climbing toward 60,750 by mid-2027.
Foreign inflows remain a key pillar of the bullish medium-term view. Government data show overseas investors were net buyers of ¥1.42 trillion in Japanese equities in the week to February 14, the largest weekly inflow since October, reinforcing momentum as global allocators increase exposure. A solid domestic earnings backdrop is expected to keep attracting capital.
Artificial intelligence continues to support selected sectors, particularly semiconductors, chip equipment and data-centre infrastructure, as long as US hyperscalers maintain spending. However, some technology segments, including software, have seen heavier selling amid concerns about AI-driven disruption.
Looking ahead, most analysts view the risk of a 10% correction over the next three months as low. Even if US equities experience volatility, any spillover into Japan is expected to be contained.
Overall, the consensus points to consolidation near record highs before a renewed earnings-driven push toward fresh milestones.
