Nikkei 225 index double-tops amid BoJ yield curve tweak bets

July 17, 2023 07:50 PM PDT | By Invezz

Nikkei 225 index double-tops amid BoJ yield curve tweak bets — Image source: Invezz

Economic growth concerns

Japan stocks have retreated this month amid rising concerns about the global economy. American data published this month showed that the labour market slowed in June. Inflation dropped to 3.0%, signaling that demand was easing.

On Monday, Chinese data revealed that the economy expanded at a slower pace than expected in Q2. Its economy grew by 6.8%, lower than the median estimate of 7.3%. Retail sales and industrial production missed estimates while youth unemployment rate jumped to a record high.

These numbers are important for Japan since the US and China are two of its biggest trading partners globally. As a result, an economic slowdown could affect demand for some of its top companies like Toyota and Nissan.

The next important catalyst for the Nikkei 225 index will come on Thursday when Japan will publish the latest trade numbers. Economists expect the data to show that the country’s imports dipped by 11.3% in June while exports rose by 2.2%.

Japan’s exports are being helped by the weak yen. The currency plunged to 145.06 in June and then bounced back to ~138.60. A weaker yen helps boost exports by making Japan’s goods cheaper.

Meanwhile, the Bank of Japan (BoJ) and the Federal Reserve will hold their meetings next week. Economists expect that the BoJ will tweak its yield curve as it seeks to exit from its ultra-loose policy. The Fed, on the other hand, is expected to raise rates by another 0.25%.

The top Nikkei index gainers were companies like Okuma, Resona Holdings, Mitsubishi UFJ Financial, Amada, Eisai, and Mizuho Financial. All these shares jumped by over 2%. On the other hand, the top laggards in the index were Rakuten, CyberAgent, Toho, and Pacific Metals.

Nikkei 225 index forecast

Nikkei index chart by TradingView

The Nikkei 225 index has pulled back in the past few weeks. This trend happened after the index formed a double-top pattern at ¥33,766. In price action analysis, this pattern is usually a bearish sign.

The index has moved slightly below the 25-period and 50-period moving averages. Most importantly, the Relative Strength Index (RSI) has formed a bearish divergence pattern. Therefore, the Nikkei index will likely remain under pressure as profit-taking continues. This trend could see it drop to ¥31,000.

The post Nikkei 225 index double-tops amid BoJ yield curve tweak bets appeared first on Invezz.

Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media LLC (Kalkine Media, we or us) and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures/music displayed/used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source (public domain/CC0 status) to where it was found and indicated it, as necessary.