Nikkei 225 followed Wall Street higher as Nasdaq hit another record high while the S&P 500 also approaches the all-time highs. Robust manufacturing data from the USA, Europe and China yesterday boosted investor’s confidence that the global economy is returning to a growth path, despite the rising number of new coronavirus cases in many countries.
Meanwhile, trade tensions between China and the USA continue despite President Trump gave the green light to Microsoft to buy the U.S. operations of TikTok. The USA is preparing to impose sanctions against companies that can share data with China.
Chicago Fed President Evans warned that more troubles brewing ahead as the current relief package expires and asked for new fiscal measures to support the economy.
On the economic data front, the Japan Tokyo Consumer Price Index (CPI) came in at 0.6% above the analyst’s estimates of 0.4% in July. The CPI excluding Food and Energy also came above expectations at 0.6%. The Japan Monetary Base expanded by 9.8%, topping the expectations of 6.3% in July. Japanese economy shows signs of improvement and economic data points for a faster than expected recovery, boosting local equities.
Nikkei 225 top performers are Asahi Kasei, Kikkoman, Mazda Motor and Mitsubishi Chemical. On the other hand, Fujitsu, Omron and Casio Computer finished with losses above 1.5%.
Nikkei 225 Daily Analysis
Nikkei 225 ended the session 1.70% higher at 22,573 breaking above the 50-day moving average having spent only two trading sessions below that resistance. Bullish momentum returns for the Nikkei 225 stocks after the short correction. Bulls would face resistance at 22,836 the high from July 28. More pressure expected at 23,192 the top from June 10.
On the flip side, the 50-day moving average at 22,396 would provide the first support. A break below might challenge the 200-day moving average at 21,964 which supports the index for the last six weeks. Looking below 21,964 the next critical support stands at 20,785 the 100-day moving average.
Nikkei 225 Daily Chart