Morning Brief: Nikkei 225 slides on Tokyo cases as Hang Seng shrugs Cathay woes

Asian stocks are mixed today as traders continue to reflect on the ongoing earnings season. In Japan, the Nikkei 225 index is down by 0.55% while in Hong Kong, the Hang Seng has climbed by more than 0.30%. In mainland China, the Shanghai composite is down by 0.43%. Meanwhile, in the United States, futures tied to the Dow Jones and Nasdaq 100 are up by 0.15% and 0.65%.

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Nikkei 225 drops

In Japan, the Nikkei 225 index is down by 0.50% as traders react to the surging number of coronavirus cases in Tokyo. Health officials confirmed almost 300 new cases in Tokyo, setting another record. On Thursday, the city recorded 286 new cases, leading some to speculate that the city will revert to a state of emergency. Tokyo is important for Japan because it is its biggest city and the financial and industrial capital of the country.

Most companies in the Nikkei 225 index are in the red today. Among the best performers are Hitachi, whose shares have jumped by more than 2.5%. It is followed by Dainnapon Screen, NTT Data, Eisai, and Fujitsu, whose shares have jumped by more than 1.50%. On the other hand, the top laggards are Sumitomo Realty, Pacific Metals, Amada, Nippon Paper Industries, IHI Corp, and Sumitomo Dainappon.

Nikkei 225 technical analysis

The Nikkei 225 index has had a mixed week. The week started well and the index managed to jump to 22,962. In the past two days, however, the index has dropped to the current level of 22,961. On the daily chart, the index is almost close to the 78.2% Fibonacci retracement level. It is also above the 50-da and 100-day EMAs. Therefore, the Monday outlook for the Nikkei 225 is neutral.

Nikkei 225 technical analysis

Hang Seng jumps even as Cathay warns of a large loss

In Hong Kong, the Hang Seng index rose by 0.30% even as traders reacted to news from Cathay Pacific. In a statement, the company said that it expects its loss for the first six months to jump to a record H$9.9 billion. The company blamed the loss to the coronavirus pandemic that has halted transport between the city and other countries. Swire Pacific, the biggest shareholder in Cathay is the worst-performing stock in the Hang Seng today. It is down by 1.83%.

The Hang Seng is also reacting to the latest round of sanctions by the Trump administration. According to the South China Morning Post, the city’s officials have warned that the sanctions are harsher than what the city was expecting. An official told the paper that the sanctions would have chilling effects to Hong Kong officials. In his sanctions, Trump also ended the city’s preferential treatment.

The best-performing stocks in the Hang Seng are Hengan International Group, Techtronic, Galaxy Entertainment, Sino Biopharmaceutical, and HKEX. The five are up by more than 2%. On the other hand, the worst-performing firms are AAC Technologies, Hang Lung, Swire Pacific, and China Petro & Chemicals.

Hang Seng technical analysis

The Hang Seng index has had a rough week. It has dropped from a high of $26,795 to the current level of $25,095. On the daily chart, the index has reached the ascending trend line that is shown in purple. It has also approached the 50-day and 100-day exponential moving averages. Therefore, a break below this support will be a signal that bears have taken over. That will see the Hang Seng testing the 38.2% retracement at $24,229.

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