The Nikkei 225 index rose by more than 2% as global equities staged a recovery after delivering mixed results in the past few trading sessions. The index rose ¥28,457, which is more than 7% below its YTD high of above ¥31,000. Other global indices like Shanghai Composite, Hang Seng, and futures tied to the DAX index, FTSE 100, and Dow Jones also rallied.
Nikkei 225 news: The Nikkei index has had mixed results in the past few days as worries of high inflation have dragged most indices. After soaring to a 31-year high of more than ¥31,000 early this year, the index has retreated recently.
Today, it rose even after the relatively disappointing data from Japan. The data revealed that the overall Japanese economy contracted by 5.1% year-on-year in the first quarter. This was a worse decline than the expected 4.1%. On a Quarter-on-quarter basis, the GDP contracted by 1.3%, lower than the expected 1.3%. This contraction happened as the Japanese government, consumers, and businesses slashed their spending to deal with the pandemic.
Top movers in Nikkei: Most companies in the Nikkei index were in the green today. Among the best performers were Japan Steel Works, T&D Holdings, Recruit Holdings, and Nissan Chemical. These firms rose by more than 5%. On the other hand, the top laggards were companies like Nippon Light Metal, Tokyo Gas, Teijin, and Osaka Gas.
Nikkei 225 index
The four-hour chart shows that the Nikkei broke out below the important support at ¥28,322 last Friday. It then dropped to a low of ¥27,418. The index moved back to the previous rectangle pattern today. It remains below the 25-day and 50-day exponential moving averages (EMA). The index seems to have formed a head and shoulders pattern, which is usually a bearish sign.
Therefore, even after the current relief rally, there is a possibility that the stock will retreat as bears attempt to move below last week’s low of ¥27,375. However, a move above ¥29,000 will invalidate this prediction.