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Morning Brief: Nikkei 225 Hovers Near 30-Year High; Hang Seng Slips

Nikkei 225
Nikkei 225

The Nikkei 225 is hovering near a 30-year high as investors react to the upbeat economic data from Japan and the overall market sentiment in the market. The index is trading at ¥26,718, which is a few points below ¥26,917, which is the highest level since 1991.

What happened: Earlier today, the Bank of Japan released the quarterly sentiment data that showed strong improvements. The large-manufacturers index increased from -27 to -10 while the large non-manufacturers index rose from -12 to -5.

Similarly, the small non-manufacturers and manufacturers index rose to -12 and -27, respectively. While the indices are still in the negative zone, they are signs that the industry is improving, which is a positive thing for the Nikkei 225 index.

The Nikkei is also reacting to the positive steps made in US stimulus and the decision by the Food and Drug Administration (FDA) to authorise the vaccine made by Pfizer. Also, there are positive signs in Europe, where the UK and the EU decided to resume Brexit talks.

Why it matters: Japan’s economy is on a recovery path, as evidenced by the Tankan figures. This path will receive a boost after the country passes the next $700 billion stimulus package.

Top movers in Nikkei 225: The biggest gainers in the Nikkei index are Kawasaki Heavy Industries, Chiyoda, Mitsubishi Heavy, IHI and Konica Minolta. Other top gainers are JGC, Mitsui Engineering, Sumitomo Heavy, and Subaru.

What’s happening elsewhere? In Hong Kong, the Hang Seng index is down by 0.62% while in the United States and Europe, Dow Jones, DAX Index, and FTSE 100 futures are in the green. Similarly, the price of crude oil, gold, and other metals is also rising.

What next for the Nikkei 225? On the daily chart, we see that the index has found a strong resistance near the 30-year high. It has also formed an ascending triangle pattern and is also above the 25-day and 50-day EMA. The Average True Range (ATR) has also slipped, which is a sign that volatility is dropping. Therefore, this week, the index will possibly break-out higher.

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Nikkei 225 technical chart

Nikkei 225

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