Japan’s record bull run under threat as Mideast war clouds earnings season

Japan’s record bull run faces a potential setback as the Middle East war raises inflation and oil-supply risks that could dent corporate forecasts despite strong recent earnings. The Nikkei (Japan 225) breached the 60,000 mark, supported by AI and tech optimism and a 27% gain in 2025, but sector divergence is likely: consumer names have surprised positively while manufacturers face input constraints. Nomura’s Revision Index fell to 13 from 27 and UBS SuMi Trust cut its corporate earnings-growth forecast for the year to March 2027 to 7% from 11%. Fast Retailing raised its operating-profit forecast to ¥700bn. Strategists say the market may remain broadly neutral overall, with semiconductors as potential upside drivers but geopolitical-driven oil risks weighing on the outlook.