Nikkei 225 breaks key resistance as Sony Financial soars; Softbank dissapoint

The Nikkei 225 index rose by more than 2 per cent as the market continued to react to the positive news by Moderna yesterday. The company said that its vaccine was showing signs of progress in initial tests. The market is also reacting to positive signs that the coronavirus pandemic is slowing down in Japan.

Softbank a laggard in Nikkei 225

Most companies in the Nikkei 225 rose today. Of the 225 companies in the index, less than 15 of them were in the red today. Among the biggest losers was Softbank, the embattled technology company. Investors are trying to digest the devastating news from the company yesterday in which it confirmed that it lost more than $17 billion in its vision fund. This was its biggest loss ever and one of the biggest losses in corporate Japan.

The losses in its vision fund were easy to predict. The share price of Uber has been on freefall, its UK satellite company went bankrupt, and WeWork seems to be hanging on a thread. Other smaller investments like the dog-walking app, Wag have also been in trouble.

The Nikkei 225 company revealed that it was considering selling its $20 billion stake in T-Mobile a few weeks after the company completed its merger with Sprint. The company is doing this as it tries to raise money to fund a $41 billion share repurchase plan and to pay some of its debt.

Other Japan stocks movers

Other movers in the Nikkei 225 were Sony Financial Holdings. The stock jumped by more than 16% after Sony Electric decided to take full control of the company in a deal valued at more than $3.7 billion. The electronics company hopes to make money in the fast-growing fintech industry.

Another big mover was Yamato holdings, the door-to-door delivery company, whose shares jumped by more than 8%. Investors are excited about its prospects as more people stay at home.

Other big movers in the Nikkei 225 are Mitsui Engineering, which is considering a stake sale of its Indonesian power business, Asahi Glass, and Alps Electric.

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Nikkei technical outlook

On the daily chart, the Nikkei 225 made an important step, as it moved above the 50% Fibonacci retracement level at 20,547. The index has been toying on making this crossover for several weeks now. The index also moved significantly above the 50-day exponential moving average and above the Ichimoku cloud. It also tested the 100-day EMA. These actions show that bulls are in total control of the index. Therefore, I expect them to attempt to test the 61.8% Fibonacci retracement level at 21,165.

On the flip side, a move below the 50-day EMA at 20,000 will invalidate this prediction because it will send a signal that there are still sellers of the index.

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