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Market Brief: Asian Shares and Nikkei 225 After Weaker Retail Sales in China

Nikkei 225
Nikkei 225

Asian shares slide on Thursday amid an increase of new infections and rising tensions between China and the USA. The retail sales from China disappointed investors. The retail sales in June fell 1.8% well below the expectations of +0.3%. On the other hand, the GDP grew 3.2%, beating the forecasts of 2.5% showing signs of recovery after the lockdown. The Industrial Production came in at 4.8% topping the estimates of 4.7% in June.

Stocks rallied yesterday on positive results about the coronavirus vaccine and better than expected earnings reports from the major U.S. banks. Dow Jones ended 0.85% higher at 26,870 while the Nasdaq finished 0.59% higher at 10,550

In Asia, Nikkei 225 ended 0.76% lower at 22,770. The Shanghai Composite index plunged 3.99% at 3,226. The Singapore Straits Times index is 0.47% lower at 2,636. Hang Seng is 1.70% lower at 25,050.

Crude oil price is under selling pressure on speculation that OPEC countries might ease the crude oil production cuts. WTI crude oil futures are 0.95% lower at 40.81 while the Brent crude oil is 0.60% lower at 43.38.

Nikkei 225 Retreat From Monthly Highs

Nikkei 225 retreated today from one-month highs as investors taking some profits off the table after the recent rally that boosted on optimism for a faster than expected economic recovery. The Foreign Investment in Japan Stocks rose from the previous ¥-77B to ¥67.2B in the week ended July 10, while the Foreign Bond Investment increased to ¥1065.7B from previous ¥-522.8B. 

On the technical side, initial support for Nikkei 225 stands at 22,739 today’s low. If the Nikkei index moves below, then the next support will be met at 22,519 the low from July trading session. If the selling pressure continues in stocks, the next support area stands at 21,927 the 200-day moving average.   

On the flip side, the first resistance for the Nikkei 225 index stands at 22,925 the daily top. The next resistance for the Nikkei 225 stands at 22,986 the high from June 11. If the index continues higher than 22,9863, the next supply zone is at 23,190 the top from June 10.  

Nikkei 225 Daily Chart