Nikkei 225 pauses again as Softbank plans large Vision Fund layoffs
The Nikkei 225 index was little changed today as investors remained calm ahead of the interest rate decision by the Federal Reserve. The index is trading at ¥23,087 and most constituent companies are in the red. Other indices in the Asia-Pacific region too were unchanged, with the Hang Seng adding 45 points and the ASX too adding 20 points.
Softbank announces layoffs
Softbank shares were little changed after Nikkei reported a large round of layoffs. The company will shed about 15% of total workforce at the Vision Fund, which lost a record $16.7 billion in the first quarter. This decision will mark the first time that the fund has lost workers after expanding aggressively since 2016.
The fund has been in trouble since Uber launched an underwhelming IPO. Problems continued when WeWork attempted to launch its own IPO. Other companies that have underperformed include dog-walking app Wag and hotel chain, Oyo. Softbank share price is unchanged at ¥5,360.
Bank of Japan decision
As the Nikkei 225 pauses ahead of the Fed decision, many analysts are looking ahead to the upcoming decision by the Bank of Japan. According to Bloomberg, most analysts polled expect the bank to keep policy unchanged. Others expect it to enhance its loan support for companies in some form. This decision will come at a time when the bank has pledged unlimited purchases of government bonds and ETFs. It has also launched loan programs to cushion the country’s companies.
Meanwhile, investors in the Nikkei 225 are looking forward at the trade negotiations between Japan and the UK that started on Tuesday. While the negotiations are in initial stages, the two countries are looking to improve the existing trade deal between Japan and the EU. Japan wants to scrap auto tariffs while the UK has said it wants to focus on its financial industry.
Best and worst performers in the Nikkei 225
Takara Holdings was the best-performing stock in the Nikkei 225, gaining by 10%. It was followed by Dainippon Screen, Yamato, Nissan Chemical, and Chugai Pharmaceuticals. All these gained by more than 3%. On the other hand, Obayashi, Shimizu, Toho, and Taisei were the worst performers.
The Nikkei 225 index is trading at the psychological-important level of ¥23,000. On the daily chart, this price is above the 78.6% Fibonacci retracement level. It is also above the 50-day and 100-day exponential moving average. Overall, the index is still in an upward trend, which means that the price will likely continue rising. If it does, it will then target this year’s highest level of ¥24,100.
On the other hand, a move below the 78.6% retracement level at ¥22,485 will mean that there are still more sellers in the market. This will likely see them push the price lower as they attempt to test the psychological important level of ¥22,000.