Nikkei 225
The Nikkei 225 is down by more than 0.67% today as traders remain concerned about the rising number of coronavirus cases. They are also worried about the weak household spending data from Japan and the sharp decline of the account surplus. The index is trading at ¥22,472, which is along an important technical level.
The Nikkei 225 is reacting to a number released by the statistics office yesterday. The data showed that household spending in the country dropped by a record 16% because of the coronavirus pandemic. This number is important for the Nikkei because a substantial number of its companies are in consumer-facing industries.
The data showed that spending in a household of two people averaged about $2,300, down for the eighth consecutive month. The spending has also been falling because of a consumption tax that the government imposed.
Still, the biggest reason for the decline was coronavirus, which has seen many industries struggle. Among the worst-affected are leisure and restaurants. However, the ¥100,000 handout that the government is giving will go a long way to help people deal with the situation.
Meanwhile, the Nikkei 225 is also dropping because of a sharp decline in the current account surplus. According to the Finance Ministry, the surplus dropped by 27.9% in June from a year earlier. That decline is partly because of a rapid decline in the number of foreign arrivals due to the pandemic.
The balance stood at $11 billion and has been in the black in the past 71 months. At the same time, the country’s goods deficit narrowed by 18.1% to ¥556 billion.
Most companies in the Nikkei 225 index are in the red today. Among the best performers are Yamato Holdings, Kobe Steel, Mitsubishi Motors, and Sumitomo Chemicals. These shares have gained by more than 1%. On the other hand, the biggest laggards are CyberAgent, Konami, Marui, and Kawasaki Kisen. All these are down by more than 3%.
The Nikkei 225 index is trading at ¥22,455, which is lower than this week’s high of ¥22,738. By dropping, the index is in its second straight day of losses. Still, it is above the ascending trend line that is shown in black. It is also above the 50-day and 100-day exponential moving averages and along the 78.6% Fibonacci retracement level.
Therefore, at this point, the outlook of the Nikkei 225 is neutral. A move below the current level of ¥22,455 will signal that bears have prevailed. This is because the price will have moved below the ascending trend line.
However, a move above Monday’s high of ¥22,738 will send a signal that there are more bulls in the market who will be keen to pushing the price higher.