Nikkei 225
The Nikkei 225 retreated today after the Bank of Japan delivered its final rate decision and after the weak inflation numbers. The index, which tracks the biggest firms in Japan, declined by 0.15% and is trading at 26,768 yen. Similarly, in Asia, the Hang Seng, ASX 200, and the Shanghai composite declined.
What happened: The BOJ concluded its two-day meeting today. The bank left the headline interest rate at -0.10%, where it has been for more than five years. It also continued with its yield-curve control program. The most notable change was its decision to extend the duration of its asset purchases.
The decision came shortly after the statistics bureau released weak consumer price index (CPI) data. These numbers showed that the headline CPI dropped by 0.9% in November, making it the worst performance in a decade.
Why these events matter: Companies in the Nikkei 225 are the most important in Japan. For example, firms like Toyota, Nissan, and Softbank employ millions of people and are critical to Japan’s economy. Therefore, in general, a dovish BOJ and its commitment to provide more support is essential for them. Another aspect is the fact that the Japanese yen has eased after the two events.
Top movers in Nikkei 225: The best performers in the Nikkei are Pacific Metals, Nippon Sheet Glass, Asahi Glass, and the Japan Steel Works, which have risen by more than 4%. The top laggards are Mitsubishi Estate, Daikin Industries, and Tokyo Electron, among others.
What’s happening elsewhere: In the United States, the Nasdaq 100, S&P 500, and Dow Jones are in the red while in Europe, futures tied to the DAX index and FTSE 100 have retreated.
What next for the Nikkei 225: The Nikkei 225 is on track for its third straight weeks of declines as traders react to the BOJ decision. On the daily chart, the price is between the 50% and 38.2% Fibonacci retracement level.
The price is also above the 25-day and 50-day Hull moving average (HMA). Therefore, in the coming week, the index will possibly be under pressure as traders attempt to test the 50% retracement at 25,834 yen.
