Nikkei Breakout Continues on Japan GDP Beat
Nikkei Breaks Above 30k
The Nikkei has broken out to its highest levels since Q3 2021 this week. The index has been on a tear recently, printing gains of around 18% now for the year with around 6% worth of gains in May alone. One driver behind the move has been the BOJ’s reaffirmed commitment to maintaining an easing presence in the market. Ahead of the shift in BOJ leadership in April there had been a great deal of speculation that incoming BOJ chief Ueda would look to depart from the easing stance of his predecessor. However, with Ueda citing the need to keep low rates in play, JPY was seen coming under heavy selling pressure allowing for a breakout move in the Nikkei.
Japan GDP Beat
More recently, the index has benefited from strength in the Dollar which has put additional pressure on JPY. Uncertainty around the US debt ceiling deadline has seen safe-haven demand moving into USD, sapping support for JPY. A weaker domestic currency has therefore created plenty of demand for Japanese stocks with those having recently reported strong earnings seeing the most demand. Overnight, a stronger-than-expected quarterly GDP reading for Japan has also helped lift sentiment which should keep the index supported into the back end of the week.
Technical Views
Nikkei
The rally in the Nikkei has seen the index breaking out above the 29153.1 level and surging higher. With momentum studies firmly bearish and retail traders heavily short the index, price looks poised for further gains near-term with the 30502.8 level the next hurdle for bulls.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.