Market Brief: Nikkei 225, Hang Seng Index Weighed Down by US-Iran Conflict
Asian stocks were in the red in today’s morning trade. The Nikkei 225 closed 451.8 points or 1.91% lower at 23,204.9. Meanwhile, the Hang Seng Index is in the red by 289.6 points or 1.02% at 28,161.9. Shanghai Composite Index was also down by 0.378 point or 0.01% at 3,083.408.
US-Iran Tensions Weigh Down Sentiment
Risk aversion continued to dominate market sentiment. Investor concerns have been fueled by rising tensions between the US and Iran. Remember that last week, the US took responsibility for the death of Iranian General Soleimani. Over the weekend, Iran has vowed to retaliate against the US. The country has already issued a bounty for US President Trump’s head and has warned that it will no longer follow limits imposed by a nuclear deal. Consequently, higher-yielding assets like equities were sold off as investors seek safe haven assets.
Gainers and Losers on Asian Stock Markets
Inpex Corp led gains in the Nikkei 225 with a 4.09%, followed by J. Front Retailing Co. Ltd at 3.59%. Meanwhile, PetroChina Co. Ltd. had a 3.71% gain while CNOOC Ltd. is currently up by 3.32%. Among Chinese stocks, Gansu Ronghua Industry and Chifeng Jilong Gold Mining Co. Ltd both closed with a 10.08% profit.
On the other hand, Unitike and Kikoman Corp were two of the biggest losers in the Nikkei 225 at -4.50% and -4.28%, respectively. CSPC Pharmaceutical led losses in the Hang Seng Index at -4.65%. Meanwhile, Shandong Huifa Foodstuff was the biggest loser on the Shanghai Composite Index as it finished the day at -10.00%.
Risk Currencies Gap Lower
Not even currencies were spared from the market’s jittery sentiment. We saw weekend gaps among commodity or “risk” currencies. AUDUSD opened 9 pips lower at 0.6939 today. NZDUSD, meanwhile, had a 5-pip gap at 0.6656. USDJPY opened 29 pips lower from Friday’s close when it started today at 107.82.
Chinese Officials to Travel to Washington to Sign Trade Deal
News about Chinese officials travelling to the US to sign the US-China phase one deal could help ease risk aversion. Earlier today, the South China Morning Post reported that a Chinese delegation led by Vice Premier Liu He is scheduled to fly to Washington on January 13.
On the 4-hour time frame, we can see that USDJPY has filled the weekend gap it incurred. If risk aversion eases, we could see the currency pair pull back some of its gains. You can keep an eye on the 61.8% Fib level (drawing the Fibonacci retracement tool from the high of January 2 to today’s Asian session lows). This price, around 108.45, also served as a support level for the currency pair in the past.
However, be wary of a strong bearish close below today’s Asian session lows at 107.75. New lows for the currency pair may mean that USDJPY is on its way to test support at 106.60 where it previously found resistance in August and support in October.