Nikkei 225
The Nikkei 225 index is rising today as investors react to the latest developments on Softbank. The index is up by 0.57%, becoming one of the best-performing Asian indices today. In China, the Hang Seng index is up by 0.46% while the Shanghai composite is up by just 0.10%.
Softbank is the biggest mover in the Nikkei 225 today. The share price is up by more than 9% and is trading at ¥6,378, which is the highest it has been during the weekend.
Two main things happened during the weekend. First, media reports said that the company would sell Arm, its British chipmaker to Nvidia, a company it has been an investor in for years. The transaction will make Softbank the biggest investor in Nvidia. It will also make Softbank a lot of money considering the company invested about $36 billion in Arm four years ago. It also marks significant progress for the company, which has been embattled in the past few weeks after its Nasdaq whale allegations.
Second, according to the Financial Times, Softbank’s executives have started talking about taking the company private. Their main concern is that the current market capitalisation significantly undervalues the company’s core holdings. If it manages to go private, it will be the biggest such transaction in Japan. It will also be a blow to the Nikkei 225 because Softbank is the second-biggest firm in the index.
The Nikkei 225 is also rising because of the rising expectations that a coronavirus vaccine will be unveiled in the next few months. Over the weekend, AstraZeneca announced that it had resumed human trials of the vaccine it is developing with Oxford University. The firm was forced to halt the study after a member got sick. Meanwhile, in the United States, Pfizer said that its vaccine will likely go into use by the end of the year.
In addition to Softbank, the biggest movers in Japan today are Hino Motors, Pacific Metals, Toho Zinc, Casio Computer, and IHI Corp. All these firms are up by more than 4%. On the other hand, the worst-performers are Kawasaki Kisen Kaisha, Mitsui O.S.K Lines, Tokyo Dome, and Nippon Yusen.
The daily chart shows that the Nikkei 225 index is in its fourth straight day in the green as investors remain optimistic about Softbank. The index is trading at ¥23,563, which is the highest it has been since September 3. The price is now attempting to accelerate its rally as bulls aim at this year’s high of ¥24,141.
The price remains above the 50-day and 100-day exponential moving averages and above the 78.6% Fibonacci retracement level. Therefore, I suspect that the index will continue rallying as bulls aim to cruise above this year’s high of ¥24,141.
On the flip side, a move below ¥22,885 will invalidate this trend. This price is the September 9 low and is also slightly below the 50-day EMA.
Do you want to be an excellent trader? Register for our free forex trading course and one-on-one coaching by traders and analysts with decades of experience in the industry.
