The Nikkei 225 declined by more than 1.50% as investors reacted to the surging coronavirus cases in Japan and the weak trade numbers.
The best-performing stocks in the Nikkei 225 index were Dainippon Screen, Taiheiyo Cement, Dentsu, and Konica Minolta, which rose by more than 3%. On the other hand, the main laggards were The Japan Steel Works, Daiichi Sankyo, and Sumitomo Dainippon, which lost more than 3%.
Earlier today, the Ministry of Finance released disappointing trade numbers for the month of March. The numbers showed that the country’s exports declined by more than 11% in March while imports declined by 5%. As a result, the trade surplus declined by more than 90% to more than Y4.9 billion.
These numbers indicate that the Japanese economy will shrink by a bigger number than analysts expect. This is because April’s trade data will be significantly worse than that of March because the country is now in a state of emergency.
The Nikkei 225 index dropped to an intraday low of ¥19,597 today. On the daily chart, this price is slightly above the 38.2% Fibonacci Retracement level. This retracement was drawn by connecting the highest and lowest levels this year.
Additionally, the price is slightly above the 50-day exponential moving averages and slightly below the 100-day EMA.
I expect the bullish trend to remain if the index remains above the 38.2% Fibonacci level at ¥19,281. The bullish rally will then see the index test the 50% retracement level, which is also the 100-day EMA at ¥20,200.