The Nikkei 225 is up by more than 1.45% as traders react to the outcome of the US election. The index is trading at ¥24,000, which is a few points below the year-to-date high of ¥24,136. Other indices in Asia are also rising, with the Hang Seng and Shanghai composite up by 2.65% and 0.95%, respectively.
The biggest mover for the Nikkei 225 and other Japan stocks is the US election. While the final results are not out, investors have already started pricing-in a Joe Biden victory. They also see a deadlock in Washington as Republicans are set to control the senate.
A Biden victory is seen as being positive for Asian stocks because, unlike Trump, he will be relatively diplomatic. He will also be unlikely to resort to tariffs, which have also hurt Americans. Also, because of the gridlock, he will also not hike interest rates as he had promised to do during the election. He will only be able to do that after two years if Democrats manage to recapture the senate.
In addition the Nikkei is also rising as the Japanese earning season continue. Yesterday, we received mixed results from companies like Softbank, Itochu, Marubeni, and Mitsubishi Chemicals. Today, the key companies to watch will be Nintendo, Mitsubishi Corp, Daikin Industries, Asahi, and Suzuki Motors, respectively.
Most companies in the Nikkei 225 are in the green today. The best performers are Kikkoman, Daiichi Sankyo, Olympus, and Softbank. All these stocks are up by more than 5%. On the other hand, the main laggards are Ricoh, Mitsubishi Motors, NTT, and Komatsu.
Nikkei 225 technical outlook
On the daily chart, we see that the Nikkei gapped higher yesterday, when it reached a high of ¥23,812. By so doing, the index broke-out above the previous ascending triangle pattern. It also remains above the 25-day and 50-day moving averages.
Most importantly, the price is just a few points below the important resistance at ¥24,136. Therefore, I suspect that the index will continue powering higher as bulls attempt to test the YTD high. On the flip side, a move below ¥22,978 will invalidate this trend.