NIKKEI 225 FALLS ON CONCERNS REGARDING U.S.-CHINA TRADE; PMI OUTPERFORMS
Nikkei 225 futures are currently trading at 21865-lower by 1.33% as compared to the previous closing. The contract, however, closed in the positive territory in the last trading session.
In the Cash Markets, the Nikkei 225, which returned to the first day of trade following an extended Golden-week holiday declined 1.51% to close at 21,923.72 on Tuesday. It was its lowest closing level since 12th April. The broad-market index fell today on concerns that Sino-U.S. trade talks may be at risk of breaking down.
U.S. president Donald Trump said on Sunday that the current 10% levies on $200 billion worth of Chinese goods will rise to 25% on Friday, triggering a global-sell off in stocks.
The broader Topix fell 1.12% to close at 1,599.84 on Tuesday.
Stocks of companies with high exposure to China such as factory automation machinery firms and construction equipment makers fell on Tuesday. Komatsu Ltd crashed 10.06%, Yaskawa Electric plunged 6.4% and Fanuc Corp declined 3.23%.
Index members which are Apple suppliers also underperformed on concerns regarding fall in Chinese demand.
Stocks of index-component Taiyo Yuden Co Ltd crashed 14.5% on Tuesday. Alps Alpine tumbled 10.7% after it forecast a 22.1% drop in its operating profit for the first half of the current fiscal year.
Companies related to the Oil and Mining sectors also underperformed on Tuesday. Inpex Corp tumbled 4.49%, while JXTG Holdings fell 3.83%.
On the other hand, Utilities, drugmakers and railroad companies rose today. Chubu Electric Power added 1.61%, Daiichi Sankyo jumped 5.64% and West Japan Railway advanced 3.55%.
Stocks of Sony Corp rose 3.76% after the company forecasted an operating profit of 810 billion yen for the current fiscal year through March. The operating profit expectation was also above the median forecast of 700-750 billion yen.
On the data front, the final reading of the Nikkei Manufacturing PMI for April released earlier today came in at 50.2. The PMI reading was above the consensus estimates of 49.5.
On the technical front, the RSI is currently at 44.4% and suggests that the market can move in the downward direction. The current price is below the MA5. The current price is below the lower band of the Bollinger Bands and is heading downwards.
Overall Bias is Negative and Short-term trades can be initiated with below mentioned Stop Loss and Profit targets.
Trade Suggestion-Stop Sell At 21855 Take Profit At 21755 Stop Loss At 21905