Nikkei 225 and Asian stocks trading lower on Friday followed a new chapter in trade tensions between China and the USA. President Trump banned the transactions of U.S. companies with ByteDance, the owner of TikTok, and WeChat app as the Chinese companies is a threat to U.S. national security. Now analysts expect the reaction and some retaliation measures from Beijing.
Economic data from Japan failed to impress investors. Japan, Leading Economic Index, came in at 85 above the estimates of 78.8 in June, while the Coincident Index registered in at 76.4 topping the forecasts of 73.4. The Japanese announced earlier that it would spend more than 1.1 trillion yen to support small businesses and households hit hard by the coronavirus pandemic.
The better than expected economic news from China failed today to support the equities in the region. China Exports came in at 7.2%, beating the expectations of -0.2% in July. The imports in the country came in at -1.4% below the estimates of +1%. Chinese Trade Balance came in at +62.33B well above the forecasts of +42.0B; the previous reading was at +46.42B.
Investors await the U.S.U.S. non-farm payrolls data, which will be released at 12:30GMT. Analysts expect an increase of 1.60 million in July; the June reading was 4.8 million.
Nikkei 225 Daily Technical Analysis
Nikkei 225 finished 0.39% lower at 22,329 failed for one more day to stay above the critical 50-day moving average resistance. The bulls have to be patient as the rejection today might trigger a correction down to 20,868.
Support for Nikkei is at 22,204 the daily low. Next support level to watch is at 20,868 the 100-day moving average. A break below would invalidate the recent bullish momentum, and bears might challenge 21,685 the low from July 21.
On the other hand, as I mention above the 50-day moving average has proved a strong resistance. Next resistance stands at 22,834 the top from July 28. A break above would open the way 23,160 the high from June 10.
Nikkei 225 Daily Chart