JAPAN-STOCKS

Nikkei225 Closes 1.29% Higher – Market Outlook Positive

Most markets in Asia advanced on Tuesday while the dollar slipped ahead of a congressional testimony from the new Federal Reserve chair during U.S. hours.

Japan’s Nikkei 225 rose 285.75 points, or 1.29 percent, extending a 1.19 percent gain seen in the last trading session. The technology, financials and manufacturing sectors traded in positive territory.

Among index heavyweights, SoftBank Group advanced 0.76 percent, Fanuc Manufacturing gained 2.15 percent and Fast Retailing added 1.32 percent. Automakers also traded higher, with Honda Motor climbing 2.23 percent.

There is a strength for the yen USDJPY, -0.07% after Bank of Japan governor. Haruhiko Kuroda reiterated to parliament that there is no plan for another comprehensive review of the central bank’s current policy efforts and that it continues to target getting inflation to 2%.

The stronger yen is likely hurting the BoJ’s efforts to fuel inflation. Bank of America Merrill Lynch estimates that for every 5% drop for the dollar against the yen, Japan’s core inflation rate is pushed down about 0.1 percentage points. “Any further yen appreciation could pose a downside risk” to the price outlook, the investment bank said.

On the technical charts, Nikkei 225 is trading in the positive zone, above all the moving averages (9 day, 20 day, 50 day, 100 day and 200 day). The RSI is at 52.35 and the MACD is above the signal line. Positive bias is dominating the market.

Trade suggestion:

Buy stop at 22435, Take profit at 22494, Stop loss at 22325

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