Asian stocks are rallying today as traders remain optimistic about a global United States after last week’s election. In Japan, the Nikkei 225 index is up by more than 2.12% with most of its constituent companies rising. It reached a high of ¥25,000, which is the highest it has been since November 1991.
In Hong Kong and mainland China, the Hang Seng and Shanghai composite indices have gained by more than 1%.
Investors believe that the incoming Biden administration will be better than that of the current president. In his policies, he advocated for better relations with other countries, including China and Japan. Part of his strategy will include removing most tariffs that were implemented in the current administration. He will also seek to partner with other countries like those in Europe to create balanced trade.
In Europe, futures tied to the DAX index and FTSE 100 have also rallied as traders wait for clarity about the new administration. Ideally, investors also hope for a closer transatlantic relationship, which is a harsh reversal from what Trump did. In his administration, the outgoing president treated European allies as competitors of the US. The DAX and FTSE are also rallying ahead of key earnings from Siemens, Adidas, and Henkel.
In the United States, the Dow Jones, S&P 500, and the Nasdaq 100 indices are up by more than 2%. This is in line with what the indices perform after a national election. The market is also rallying because of the likelihood of a gridlock in the US, which will be a good thing for companies. That is because the new administration will find difficulties in hiking taxes.
Elsewhere, most commodities are rising today, with the price of crude oil rising by more than 2.50%. Gold and silver have risen by more than 0.30% while copper is up by more than 0.35%. In currencies, the US dollar index has dropped by more than 0.05%.
Nikkei 225 technical outlook
The Nikkei 225 rose to a high of ¥25,000 as traders reacted to the US election. On the daily chart, it is above all the short, medium, and long-term moving averages. The Relative Strength Index (RSI) has also moved above the overbought level of 70. It has also moved above the ascending triangle shown in green.
Therefore, at this point, the path of least resistance is higher, with the next resistance at ¥25,100. On the flip side, a move back to the triangle pattern at ¥23,735 will invalidate this trend.