Nikkei 225 finished lower today after the Federal Reserve kept the interest rates unchanged at 0-0.25% as was expected by markets and extended the swap lines with other major central banks. Fed repeated that it would use all tools available to support the U.S. economy but warned that the economic recovery would depend on the course of the COVID-19 outbreak. Fed Chair, Jerome Powell noted that the U.S. economy would need more monetary and fiscal stimulus.
New coronavirus infections surpassed the 1000 mark in Tokyo, and the government decided to shrink the operating hours of bars and restaurants, to contain the virus.
Better than expected retail data failed to impress investors. The Japan Retail Trade seasonally adjusted came in at 13.1%, beating the forecasts of 7.1% in June. The yearly figure for Japan Retail Trade registered in at -1.2%, also above the forecast s of -6.5%. Large Retailers Sales dropped by -3.5% but beat the expectations of -12.3% in June.
Nikkei 225 index supported by M3 Inc., which ended 6.05% higher after the company reported better than estimates profit for the second quarter. On the other hand, Kao Corp. finished 5.64% lower after the company downgraded the profit forecast for the full year 2021.
Nikkei 225 Daily Technical Analysis
Nikkei 225 finished 0.26% lower at 22,339 as the index testing the 50-day moving average support line. The technical picture remains bullish despite the recent correction. What can cancel that momentum is a break below the 50-day moving average.
Looking lower, the initial support for the index stands at 22,334 – 22,297 zone the 50-day moving average. A credible break below might challenge the 200-day moving average at 21,954.
Bulls, on the other hand, would face the resistance at 22,506 the daily top. Above that, the next supply zone stands at 22,843 the high from July 28.
Nikkei 225 Index Daily Chart