Brief: DAX Index, Nikkei 225 Spikes As Suga Unveils New Giant Stimulus

Summary:

The Nikkei 225 index has jumped sharply as traders react to the latest stimulus offer by Japan Yoshihide Suga. The funds brings the total stimulus to $3 trillion.

The Nikkei 225 is the best-performing index in Asia as investors cheer the new expansionary policies by Yoshihide Suga. That is after the premier unveiled a new $708 billion stimulus package that he hopes will help the country navigate the current crisis. His cabinet approved the package yesterday and the parliament is set to pass it soon.

In total, the government has provided stimulus worth close to $3 trillion. As part of the new deal, $384 billion will go towards direct fiscal and carbon emission programs. Some of it will even go towards boosting technology initiatives. Other funds will go towards the Go To Travel initiative, which the government hopes will provide more support for the economy.

This stimulus will be a positive thing for Nikkei 225 companies. Indeed, the top-performers are firms that will directly benefit like Nissan, Japan Steel Works, Softbank, and Kawasaki Heavy Industries, among others.

Meanwhile, in the United States, futures tied to the Dow Jones, S&P 500, and Nasdaq 100 are up by 0.30%, 0.25%, and 0.10%. This comes a day after the three ended at record highs as congress continue to deliberate on stimulus. The possibility of a deal increased after the White House submitted a $918 billion package that will be accepted by congressional democrats.

In Europe, futures tied to the DAX index and FTSE 100 are also rising ahead of crucial talks between Boris Johnson and European leaders. They are also looking ahead to the deliberations on EU budget and the upcoming ECB interest rate decision.

Nikkei 225 technical outlook

The Nikkei 225 index is trading at ¥26,817, which is a few points below this year’s high of ¥26,943. The latter price is the highest it has been since 1991. It is above the 25-day and 50-day weighted moving averages while the RSI is hovering close to the overbought level.

Therefore, at this stage, the path of least resistance for the Nikkei index is higher. If this happens, there is a possibility that it will move to the resistance at ¥26,900.