NIKKEI 225 FALLS BELOW MA5 ON STRONG YEN AND MIDDLE EAST TENSIONS
Nikkei 225 futures are currently trading at 21055-lower by 0.52% 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 declined 0.43% to close at 21,193.81 on Tuesday. The benchmark index dropped today as strong yen and intensifying U.S.-Iran tensions hit exporters and limited risk appetite.
Tensions between the U.S. and Iran mounted after Iran said that a U.S. decision to impose sanctions on the country’s supreme leaders permanently closed the path to diplomacy.
The Japanese yen today rose to its highest level against the dollar since early January. Stocks of exporters fell on strong yen. Tokyo Electron lost 3.31%, Hitachi Ltd declined 1.11%, Toyota Motor dropped 0.6% and Honda Motor Co slipped 0.72%.
Stocks of index heavyweights also underperformed today. Fast Retailing dropped 0.66% and Fanuc Corp fell 1.57%.
Companies with high exposure to China such as factory automation machinery firms and construction equipment makers were traded mixed on Tuesday. Komatsu Ltd gained 0.77% while Yaskawa Electric lost 0.44%.
On the other hand, stocks of Defence equipment maker rose after a report that U.S. President Donald Trump had recently spoken privately about withdrawing from the defence treaty with Japan.
The broader Topix lost 0.27% to close at 1,543.49 on Tuesday.
On the economic front, the Corporate Service Price Index (YoY) for May released earlier today came in at 0.8%. The index change was below the market expectation of 1.1%.
On the technical front, the RSI is currently at 47.92% 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 84% 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 21075 Take Profit At 20960 Stop Loss At 21125