NIKKEI 225 FALLS BELOW MA5 ON INCREASING SINO-U.S. TRADE TENSIONS
Nikkei 225 futures are currently trading at 21085-higher by 1.15% as compared to the previous closing. The contract, however, closed in the negative territory in the last trading session.
In the Cash Markets, the Nikkei 225 declined 0.59% to close at 21,067.23 on Tuesday. The broad-market index dropped to a three-month low of 20,751.45 earlier in the session.
The benchmark index inched down today as investor sentiment took a further hit after China defied Washington by announcing retaliatory tariffs, dragging most sectors lower on Tuesday.
The broader Topix lost 0.40% to close at 1,534.98 on Tuesday. The index fell to a more than the four-month low of 1,508.85 earlier in the session.
China announced on Monday that it would increase tariffs on $60 billion of U.S. goods, beginning on 1st June. The announcements came despite the U.S. President’s warnings not to retaliate against additional tariffs on Chinese imports announced by the White House last week.
Stocks of Automakers fell on Tuesday. Mazda Motor lost 2.05% and Subaru Corp dropped 2.30%.
Nissan Motor fell about 3% after the Nikkei business daily reported that the company will likely experience its fourth straight year of decreasing profits in the financial year through March 2020.
On the other hand, defensive stocks ended in positive territory on Tuesday. KDDI Corp rose 2.45% and Nippon Telegraph and Telephone Corp added 1.9%.
Stocks of companies with high exposure to China such as factory automation machinery firms and construction equipment makers ended in positive territory after slumping earlier in the session. Komatsu Ltd inched up 0.55%, Yaskawa Electric gained 0.96% and Fanuc Corp edged up 0.079%.
Companies related to the Oil and Mining sectors also rose today. Inpex Corp added 0.70%, while JXTG Holdings rose 1.75%.
On the data front, the Economy Watchers Current Index for April released earlier today came in at 45.3. The index reading was below the consensus estimates of 45.9.
On the technical front, the RSI is currently at 31.40% and suggests that the market can continue trading sideways. The current price is below the MA5. The %K has crossed the %D from above to the downside at around 17% and suggests that the market can move in the downward direction.
Overall Bias is Negative and Short-term trades can be initiated with below mentioned Stop Loss and Profit targets.
Trade Suggestion- Limit Sell At 21110 Take Profit At 21000 Stop Loss At 21160