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Nikkei 225 begrudgingly rises as investors shrug-off Softbank $10B loss

Nikkei 225 m
Nikkei 225

Nikkei 225 index rose even as the market received some weak data and news from Japan. The country’s industrial production slumped by 3.7% in April while retail sales slumped by 4.6%. Also, Japan announced that it would extend its state of emergency as it tries to deal with the coronavirus pandemic.

Is Masayoshi Son the worst investor ever?

Softbank stock price rose by more than 1.26% even as the company shocked the market again. In a statement, the management said that it would write down more than $9.6 billion on some of its investments. The overall number is bigger because this figure does not include its investments in the vision fund.

Softbank, a member of the Nikkei 225, is having one of its worst years as some of its big investments flop. For example, the value of WeWork has declined from a peak to less than $10 billion. The company is facing existential risks if Masayoshi Son fails to invest. Other struggling companies in its portfolio include Oyo; a hotel chain, Wag; a dog-walking app, and One World, a recently-bankrupt satellite company.

All this has brought back memories of the dot com bubble when Masayoshi Son famously lost more than $70 billion. As a result, some Twitter users are questing whether these problems make Masayoshi Son the worst investor in the world.

Japan extends state of emergency

In another big news for Japan and the Nikkei 225, Shinzo Abe’s government is expected to extend its lockdown by about a month. This news was first reported by Nikkei, which quoted a government source. The news come as the number of coronavirus cases in the country continue to rise. Just yesterday, Tokyo said that it had identified 47 new cases. At the same time, it appears that most people in Japan are not even complying, according to Nikkei.

Nikkei 225 rises as Japan economic data disappoint

Against this backdrop, data from Japan released earlier today disappointed. Preliminary data showed that industrial production declined by 3.7% in March. This was the worst production since the past financial crisis. It will likely drop because many companies in Japan like Nissan and Toyota have warned about cutting production. Japan’s retail sales also dropped by 4.6% in March after rising by 1.6% in the previous month. The Nikkei 225 rose even after this weak data.

Nikkei 225 top movers

Surprisingly, even with all the bad news, the Nikkei 225 index rose by more than 2%. The best performers were Okuma, Alps Electric, and Suzuki Motors, which rose by more than 10%. The troubled Softbank rose by more than 1%. On the other hand, the worst performers were NTT Docomo, Shinsei Bank, and Chubu Electric power.

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Nikkei 225 technical analysis

On the daily chart, we see that the Nikkei 225 index moved above the important 50% Fibonacci retracement level of 20,277. It also moved above the ascending triangle pattern. It is now trading at the highest level since March 9, before coronavirus was declared a pandemic. By crossing this retracement, it shows that bulls are now solidly in control. Therefore, I expect the bulls to attempt to push the index higher as they attempt to test the 61.8% retracement level at 21,229.

On the other hand, a move below 18,850 will invalidate this trend. This is an important level that is at the intersection of the ascending trendline and the lowest level on June 16.