NIKKEI BULLISH ON RECEDING TRADE FEARS, DATA STEADY
Nikkei 225 rose 0.82% to close at 23,869.93 on Friday. It was its highest closing since 24th January. For the week, the Nikkei 225 added 3.4%.
The Topix index also saw gains of 0.92% to close at 1,804.02 — its highest point in almost four months.
Japanese Economy Minister Toshimitsu Motegi said on Friday that he would meet U.S. Trade Representative Robert Lighthizer next week. The meeting followed one in August in which the two sides failed to narrow differences on whether to open up negotiations for a bilateral free trade agreement.
Insurers and banks, which invest in high-yielding products such as foreign bonds, rallied as U.S. 10-year yields remained comfortably above 3%. The Index’s Insurance sector rose 2.17% for the day. For insurance and banking stocks -Dai-ichi Life Holdings jumped 3.5% and T&D Holdings rallied 3.3%. Sumitomo Mitsui Financial Group gained 1.5% and Resona Holdings advanced 1.7%.
Iron and non-ferrous metal stocks, as well as shippers, rallied on hopes that the impact on demand from China as a result of trade frictions would be limited. Nippon Steel & Sumitomo Metal gained 1.6%, JFE Holdings soared 3.1% and Sumitomo Metal Mining jumped 3.8%.
Construction equipment makers, which have heavy exposure to Chinese demand, were also steady. Komatsu added 3.4% and Hitachi Construction Machinery soared 3.8% on Friday.
Among the top gainers in the Nikkei 225, JX rose 8%, and Mitsui Mining and Smelting rose 6%.
On the economic front, All industries activity index (MoM) released on Friday came in at 0% – below market expectations of 0.2%. The index had fallen by 0.9% in the previous month. Other data released late on Thursday reported that Japanese core CPI for August rose 0.9% compared to a year ago. It was in line with market expectations, but still off the Bank of Japan’s inflation target of 2%. National CPI (MoM) also out on Thursday reported an increase of 0.5% in August. The CPI rose 0.3% in July.
On the technical front, the RSI is currently at 76.03% and suggests that the market can move in the upward direction. The current price is above the MA5. The current price is above the middle line of the Bollinger Bands and is heading upwards. The %K has crossed the %D from below to the upside at 94.73% and suggests that the market may head upwards.
Overall Bias is Positive and Short-term trades can be initiated with tight Stop Loss and Take Profit targets. This trade can remain valid until Monday.
Trade Suggestion-Limit Buy At 23750, Take Profit At 23850 Stop Loss At 23700