Nikkei 225: Japan stocks hit key support as auto problems mount
The Nikkei 225 index was the best-performing major index in Asia, rising by more than 70 basis points. The gains were led by DIC Corp, the ink manufacturer, whose stock rose by more than 8%.
Japanese auto stocks rise amid crisis
Auto manufacturers were among the best-performing stocks in the Nikkei 225 even as the industry goes through a crisis. Mazda Motor was the second-best performing stock, rising by more than 5% while Nissan shares jumped by more than 4%. Mitsubishi rose by more than 2%.
Just yesterday, Mazda announced that its net profit fell by 80% in 2019 even before the current crisis started. The company managed to net just $113 million after it sold 1.14 million vehicles. Most of the decline was from China, where its volume fell by 14% to 212k units. Its sales in North America dropped by 5.8%.
Nissan has also been in trouble. Earlier today, the company said that it would slash production by 20% because of low demand. The company is able to produce more than 7 million vehicles every year but it has struggled in the past few years. As I reported a month ago, Toyota has also slashed production. Also, Honda announced that its net profit declined by 25.3% to $4.24 billion in the year.
Japan jobs to disappear
The Nikkei 225 index also reacted to a new update by several economists at the Daiwa Institute who expects the country to lose more than 1 million jobs. In a worst-case scenario, the institute said that the rate would jump by more than 3 million.
In March, the country’s unemployment rate rose by 0.1% to a one-year high of 2.5%. In a statement last month, Sanae Takaichi, a cabinet minister said thar part time and temporary workers had declined by more than 260,000 in March.
Japan stocks best and worst performing
The best performing stocks in the Nikkei 225 were DIC Corp, Mazda Motor, DeNa, Kobe Steel, and Sumitomo Osaka, which rose by more than 3%. The laggards in the index were Nisshin Seifun, Mitsubishi Estate, and Citizen Holdings.
The Nikkei 225 index is at an important point on the daily chart. The index is slightly above the important psychological level of 20,000. This price is slightly below the 50% Fibonacci retracement level and along the ascending trendline shown in pink. Also, the price is inches below the 50-day exponential moving averages. Therefore, a bear trend will be confirmed if the index managed to close below this trendline. This will mean that bears will have prevailed, which will lead to more downward pressure.
On the other hand, a move above 20,547 will invalidate this trend because it will signal that there are still buyers in the market. This price is the highest it has been since March 6, and is slightly below the 100-day EMA.