Nikkei tops 30000 as China trade data beats expectations
Tony Sycamore September 7, 2021 2:25 AM
In the absence of an overnight lead from Wall Street, the Nikkei traded above 30,000 this morning for the first time since April, extending last week’s rally that followed news of Prime Minister Suga’s resignation.
The catalyst for the latest leg of the rally, optimism that Japan appears to have controlled the surge of the delta variant. Yesterday, the number of new cases fell below the 1000 mark for the first time since July 19, continuing a downtrend in new infections and quelling fears the Olympics may have been a “super spreader” event.
The inclusion in the index of three of the country’s largest firms previously excluded, including Nintendo, has also bolstered sentiment today.
Nintendo is amongst the world’s most well-known brands and needs no introduction. Keyence makes industrial automation systems and is the second-largest firm in the country by market value. Murata is a key supplier to smartphone makers, including Apple.
The addition of the three firms is seen as modernizing the index and will result in passive funds whose performance tracks the index, needing to buy the three new stocks and sell the stocks of the three firms now excluded.
Further supporting risk sentiment, Chinese trade data has beaten consensus expectations. Customs data showed exports jumped 25.6% y/y in August, well above the consensus forecast for a 17% rise despite the impact of the recent covid outbreak that clogged and closed ports.
While the Nikkei futures have since eased back below 30,000, the rally has further to go. As viewed on the chart below, the Nikkei remains on track for a test and break the February 30,715 high as outlined in an article last week here.
Above 30715, there is scope for the rally to extend toward 32,000, before a meaningful correction unfolds.
Source Tradingview. The figures stated areas of September 7, 2021. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.