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.
Meanwhile, the coronavirus condition in Japan is getting worse. The number of confirmed cases has continued to rise and media reports say that Tokyo health facilities are getting overwhelmed. All this means that the country could be forced to declare a complete lockdown as it tries to battle the illness.
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Nikkei 225 Technical Analysis
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.