The Nikkei 225 is little changed after the weak industrial production and capacity utilisation data.
The stronger Japanese yen has also contributed.
Finally, investors are reacting to the latest deal between Japan and Vietnam.
The Nikkei 225 is in a tight range as investors react to the latest capacity utilization data from Japan. The index is trading at ¥23,613, which is in the same range it has been in the past few weeks.
The Japanese economy’s recovery has been relatively slow as evidenced by the recent manufacturing and services PMI numbers. Today, data from the country’s bureau of statistics provided further evidence about this.
Japan’s industrial production rose by just 1% in August, down from the previous increase of 8.7%. Analysts polled by Reuters were expecting the data to show that the production rose by 1.7%. Further, the capacity utilization by the biggest banks in Japan rose by 2.9%, down from the previous month’s increase of 9.6%. Two weeks ago, data from the country showed that overtime pay, which is an important metric of how busy companies are dropped in August.
The Nikkei 225 index has also been under pressure because of the relatively stronger Japanese yen. In the past week, the yen has dropped from 106 to the current 105.4 as traders rush to its safety. Meanwhile, the index is also reacting to news that Japan will start selling arms to Vietnam.
CyberAgent, Tokyo Electron, Toho, and Shiseido are among the best-performing stocks in the Nikkei 225 today. They are all up by more than 2.30%. Softbank shares are up by more than 1.78%. On the other hand, the main laggards are Konica Minolta, JGC, Mitsui Engineering, and ANA Holdings.
Nikkei 225 technical chart
The Nikkei 225 index is trading at ¥23,613. On the daily chart, the price is above the 50-day and 100-day exponential moving averages. Most importantly, the index has formed an ascending triangle pattern that is nearing its confluence point. The current price is slightly below the resistance line of this triangle.
Therefore, for today and the rest of the week, I suspect that the price will remain inside this triangle. Eventually, I suspect that it will break-out higher as bulls attempt to move above the resistance at ¥23,750. On the flip side, a move below ¥22,978 will invalidate this trend.