The Nikkei 225 index is down by more than 0.60% as investors react to the ongoing tensions between the United States and China. The index is trading at ¥22,750, which is significantly below this week’s high of ¥22,942. Other indices in Asia too are in the red, with the Shanghai composite falling by 3.55% and the Hang Seng falling by 2.57%.
China-US tensions escalate
The Nikkei 225 index is down by more than 0.60% as investors react to the ongoing tensions between the US and China. Earlier today, China announced that it was closing the US consulate at Chengdu, as we had reported about yesterday.
In a statement, the country said that the closure was in “compliance with international law and basic norms of international relations, as well as diplomatic practices.” In the same statement, China said that the responsibility rests solely with the United States. The consulate had about 200 employees, most of whom were hired from China.
The rising tensions are not good for the Nikkei 225 index because of the important role the US and China plays in the world as the biggest economies. Companies in the Nikkei 225 will without a doubt suffer as the relations deteriorate.
Meanwhile, the Nikkei 225 index dropped as the number of coronavirus cases in Japan continued to rise. Health officials in Tokyo confirmed 366 new cases, topping 300 for the first time. Although Japan is not likely to order large stay-at-home orders, the rising number of cases could affect the level of business activity.
The Nikkei 225 has fallen as tensions between South Korea and Japan emerge. In a statement, South Korean officials warned that Japan risked reigniting tensions if it didn’t acknowledge past labour abuses. The two countries have been in a tit for tat war in the past few year.
Nikkei 225 top movers
Most companies in the Nikkei 225 were in the red today. The biggest gainers are Impex, Toyobo, Shin-Etsu Chemical, Obayashi, and Panasonic that have jumped by more than 1%. On the other hand, Fujikura, Daiichi Sankyo, Terumo, Keio, and Central Japan Railway were the biggest laggards. They have dropped by more than 3%.
Nikkei 225 technical outlook
The Nikkei 225 index is trading at ¥22,751. On the daily chart, this price is above the 50-day and 100-day exponential moving averages. It is also above the ascending trend line that is drawn by connecting the lowest levels on July 1, July 10, July 20, and July 22, respectively.
Also, the price is slightly above the 78.6% retracement at ¥22,476. Therefore, the upward trend is likely to continue so long as the price remains above this retracement. The next target will be the important resistance level at ¥23,500.
On the other hand, a move below the 78.6% retracement level will see the price continue to drop as bears target the support at ¥21,948.
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Nikkei 225 technical forecast
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