The Nikkei 225 index rallied today as investors cheered the reopening of the Japanese economy and the launch of new antibody tests in the country. Beermaker, Asahi was the top performer in the index.
Japan accelerates reopening
The Nikkei 225 index reacted to news that the country was reopening even as some question whether the Tokyo governor is moving too fast.
According to Japan Times, many people in Japan are starting to get used to the new normal, a week after the country lifted the state of emergency. Many libraries and cinemas in the country have started to reopen while more workers have started going back to work.
Meanwhile, Tokyo entered the second phase of reopening. This meant that the shutdown requests for movie theatres, gyms, and department stores with no history of unrest was lifted. At the same time, some are wondering whether the governor, who is responsible for the coordination is moving too fast.
The government has also started testing more than 10,000 for the coronavirus antibodies in a bid to understand the state of infections in the country.
In all, this progress will be positive for the companies in the blue-chip Nikkei 225 index.
Best and worst performers in the Nikkei 225
Most companies in the Nikkei 225 index were in the green today. The biggest mover was Asahi Group Holdings, which is the biggest beer manufacturer in the country. The shares rose by more than six per cent after the company completed the acquisition of Australia’s Carlton & United Breweries. The deal was valued at more than $10.8 billion.
Asahi was followed by AHI Corporation whose shares rose by 5.73% and Konica Minolta whose shares rose by 5.70%. Other big gainers in the Nikkei were Mitsui Engineering, Mitsui Mining, Kirin Holdings, and Marui Group.
Meanwhile, the worst-performers in the index were Daiichi Sankyo, Astellas Pharma, Hitachi Zosen, and Comsys Holdings. All of these declined by more than 2%.
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Nikkei 225 technical outlook
The Nikkei 225 rose to an intraday high of ¥22,400. The index is on the seventh day of straight gains. On the daily chart, the index is a few points below the 78.6% Fibonacci retracement level. It is also above the 50-day and 100-day exponential moving averages while the RSI has moved to the overbought level. Therefore, I expect the index to continue rallying as bulls attempt to test the 78.6% retracement at ¥22456.
On the flip side, a move below ¥22,000 will invalidate this prediction. This is an important psychological level and will send a signal that there are more sellers in the market.
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