Nikkei 225 Shrugs Softbank Disastrous Report; Eyes ¥20,000

GBPJPY
GBPJPY

The Nikkei 225 index rallied today as investors started pricing-in a rebound after the coronavirus pandemic. The biggest news was from China, where the country’s exports, imports, and the trade balance bounced back in March. The numbers showed that imports fell by just 0.4% in March. This was slightly better than the decline of 4.0% in February. Exports declined by 6.6%, which was better than the previous decline of 17%. These numbers are evidence that countries can recover after the pandemic.

The best-performing companies in the Nikkei 225 index were Familymart, which rose by 8.61%, Recruit Holdings, which rose by 7% and Yaskawa Electric group, which rose by 6.70%. The worst-performers were Shimizu, Obayashi, and Sumitomo Osaka cement.

Surprisingly, Softbank was among the best performers. Its stock rose by more than 5% even after the company announced its biggest loss ever. The company said that it expected an annual loss of more than $16.7 billion as the value of its tech holding slumped.

Softbank has been under pressure after some of its biggest holdings were decimated. Last year, WeWork, which was previously valued at $46 billion is at risk of going out of business. Just this month, the company sued Softbank for refusing to provide $3 billion in financing. Another company, OneWeb recently filed for bankruptcy while Oyo has recently furloughed its employees. Its dog-walking company, Wag, too has been in trouble.

Recently, Softbank has announced that it would sell assets worth $41 billion and return most of the funds to investors.

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Nikkei 225 Technical Analysis

The Nikkei 225 index has bounced back from this year’s low of ¥16,325 and risen to a high of ¥19,710. On the 3-hour chart, the price has successfully moved above the 38.2% Fibonacci Retracement level. The Fibonacci was drawn by connecting the YTD high and lows. I expect the index to attempt to test the 50% Fibonacci level of ¥20,000. This price is an important psychological level and also its 100-period exponential moving average level.

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