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Nikkei 225 slides on reports Nissan is running out of cash

Nikkei 225 m
Nikkei 225

The Nikkei 225 index is down by about 0.30% as investors respond to reports Nissan is running out of capital. The index is trading at ¥22,657, which is slightly below last week’s high of ¥22,958.

Nissan woes deepen

Nissan shares are among the worst-performers on the Nikkei 225 today, down by more than 3%, worsening the YTD decline of 36%. The shares dropped as a result of the Asian Nikkei reporting that the company will run of money next year as the car giant struggles with the ongoing Coronavirus pandemic. An executive at the company told the paper that free cash flows for the automobile business will be negative within a few months.

The firm’s net cash is set to drop by 91% – to about 96 billion yen – in the next two years. This will be a steeper decline than what Toyota and Honda are going through. Nissan will release its second quarter earnings today.

The company has been struggling in recent years. In fact, its share price dropped by more than 70% over the past five years. Troubles continued when the company ousted Carlos Ghosn, its long-term chairman.

Shares of other automakers in the Nikkei 225 are also down today. Mitsubishi Motors dropped by 12% while Suzuki and Mazda are down by more than 2%.

Daiichi Sankyo saves the day

Daiichi Sankyo, the pharmaceutical giant, is the best-performing company in the Nikkei 225 index today. The shares are up by more than 10% a day after AstraZeneca committed to pay $6 billion for a cancer drug the company is developing. The payment will come in two tranches starting with $1 billion. The other $5 billion will come as the company gets regulatory approvals.

Top movers in the Nikkei 225

Other than Daiichi, other top movers in the Nikkei 225 index are CyberAgent, Fujifilm, TDK, Tokuyama, and SUMCO Corp that are all up by more than 2%. Meanwhile, other worst performers are Hitachi Construction, Seven & I, Keisei Electric Railway, and ANA Holdings.

Nikkei 225 technical forecast

The Nikkei 225 index is trading at ¥22,657. On the daily chart, the price has formed an equidistance channel in the past few weeks. This channel is shown in purple.

Also, the price is above the 50-day and 100-day exponential moving averages while the price is above the 78.6% Fibonacci retracement level. Therefore, in the near term, the index will likely move higher as bulls attempt to test the upper side of the channel at about ¥23,100.

On the flip side, a move below the lower side of the channel at about ¥22,475 will invalidate this trend.

Nikkei 225 forecast

Nikkei 225