Nikkei 225
The Nikkei 225 index CFDS ended the day lower yesterday traders reacted to the latest corporate troubles in Japan. The numbers and updates released yesterday point to a challenging quarter for most Japanese companies.
Japanese markets were closed today as the country started the Golden Week holiday.
ANA, the flagship Japanese carrier reported a net loss of more than $551 million. This was the biggest loss in the company’s history and was lower than the 8.4 billion yen profit it reported a year earlier. The company becomes the latest global airline to report big losses. Just yesterday, we received news that the German government had approved a major bailout for Lufthansa. In South Africa, the government allowed the national airline to collapse while in the United States, the government extended billions of dollars to airlines.
The results released yesterday showed that ANA’s revenue declined by more than 20% to 392 billion yen. This decline happened as the company was forced to halt most of its flights due to the pandemic. As a result, the company has furloughed its 45,000 employees, suspended its dividend, and started negotiating for a 300 billion loan from the Development Bank of Japan.
Nissan is another casualty in the current crisis. In a statement, the company said that its losses will reach $887 million in the last fiscal year. This will be its biggest loss since the past crisis. This loss came as the growth of the automobile sector plummeted partly due to the coronavirus pandemic. However, the company was still facing financial and public relations difficulties before the crisis. Other than the slow auto sales, the company said that its financial arm will be hit hard as more people struggle to pay their dues. The loss by Nissan comes at a time when its partners, Renault and Mitsubishi are struggling.
Most companies in the Nikkei 225 index ended the day in the red. Among the best performer were Nitto Denko, Nippon Meat Packers, and Sony Financial Holdings, which rose by more than 3%. Isuzu, Nissan, and Nissan rose by about 1%. Meanwhile, the worst performers were Mitsubishi Chemicals, Kyocera, Kao, and Olympus, which fell by more than 3%.
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The Nikkei 225 index was little changed yesterday at ¥19,780. On the daily chart, it seems that the index has found some strong resistance near the 50% Fibonacci retracement level and the 50-day EMA. Still, the overall trend of the index is bullish and is being guided by the blue trendline. I expect this trend to continue as bulls attempt to test the 50% retracement level at ¥20,295. As it does this, I expect it to move above the 50-day EMA at ¥19,913.
On the flipside, a close below ¥18,850 would invalidate this trend. This price forms the confluence of the ascending trendline and the lower swing made on April 22. This action would indicate that there are still sellers in the market.