NIKKEI 225 FALLS BELOW MA5 ON SINO-U.S. TRADE TENSIONS

Nikkei 225 futures are currently trading at 20890-lower by 1.11% as compared to the previous closing. The contract closed in the negative territory in the last trading session also.

In the Cash Markets, the Nikkei 225 fell 1.21% to close at 21,003.37 on Wednesday. The broad-market index hit a two-week low of 20,884.61 earlier in the session. The benchmark index declined today as continuing Sino-U.S. trade tensions turned sentiment against companies with large exposure to China.

The broader Topix declined 0.94% to close at 1,536.41 on Wednesday.

The US president said on Monday that Washington was not ready to make a deal yet with Beijing but he expected one in the future. President Trump also pressed Japan to lower its trade imbalance with the U.S.

Banking and insurer shares fell after benchmark U.S. Treasury yields dropped to their lowest levels since September 2017. Mitsubishi UFJ Financial Group declined 1.4%, Dai-ichi Life Insurance fell 1.69% and Sumitomo Mitsui Financial Group lost 1.2%.

Stocks of companies with high exposure to China such as factory automation machinery firms and construction equipment makers also ended in negative territory on Wednesday. Komatsu Ltd shed 1%, Yaskawa Electric fell 2.9% and Cosmetics Company Sheiseido Co fell 3.6%.

Other cyclical shares also fell on Wednesday with shippers Mitsui OSK Lines falling 1.31% and Kawasaki Kisen tumbling 2.84%.

Defensive stocks ended slightly lower on Wednesday. KDDI Corp edged down 0.14% and Nippon Telegraph and Telephone Corp declined 0.63%.

Domestic-demand sensitive shares also declined today. Drugmaker Daiichi Sankyo fell 1.77% and Realtor Mitsui Fudosan inched down 0.70%.

On the other hand, stocks of Citizen Watch inched up 0.60% after it announced it will buy back up to 2.2% of its own stocks worth 3 billion yen.

On the data-front, Foreign Bond Investment in the week ending 25th May is scheduled to be released early on Wednesday. In the last week, Bond investments by Japanese abroad increased by 1355.70 billion Yen.

On the technical front, the RSI is currently at 34.45% and suggests that the market can move in the downward direction. The current price is below the MA5. The %K has crossed the %D from above to the downside at around 54% 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 20920 Take Profit At 20810 Stop Loss At 20980

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