Nikkei 225 Index Futures (CME: NIY) continue their upward trajectory and have enjoyed a strong start to the week, extending gains for a third consecutive session. The index is up 1.12% week-to-date and a staggering 19.5% year-to-date, reflecting positive investor sentiment.
Japanese markets witnessed a surge, with the Nikkei 225 climbing by 1.08% to close at 39,765 and the broader Topix Index gaining 0.97% to reach 2,755. Contributing to this rise were technology stocks, buoyed by improved consumer confidence data in Japan, which reached a near five-year high in March.
Chip-related stocks led the gains, with notable performers including Tokyo Electron and Advantest. The positive sentiment was further supported by a weaker yen, which raised the value of overseas profits for Japanese firms. Notable gainers in the Nikkei included Tokyo Electric Power, Shin-Etsu Chemical, and Rakuten Group.
Technical Analysis
The Nikkei 225 Futures (CME: NIY) is currently trading at 39,765, hovering above the 50-SMA (blue line) and 100-SMA (orange line) after a bullish breakout above the 20-SMA (green line). This signals a potential shift in short-term momentum towards the upside.
The RSI (55.15) has climbed above the significant 50.00 level, indicating a rise in buying pressure. A sustained break above the levels could bring the resistance level at 40,290 into play. A break above the initial resistance, on significant volume, could pave the way towards the multi-decade high of 40,915 price level above.
However, rejection of the SMA levels could open a path towards the 38,790 support level lower. A successful break below the initial support could trigger a sell-off lower, with the 38,060 price level acting as the next level of significance lower.
Summary
The current market sentiment leans towards cautious optimism. Positive domestic data and a weaker yen are countered by the looming US inflation data, which could trigger a shift in sentiment depending on the outcome. A lower-than-expected inflation print could fuel a risk-on rally, potentially propelling the Nikkei 225 Futures higher. Conversely, a hotter-than-anticipated inflation reading could dampen risk appetite and trigger a sell-off across global markets, potentially dragging the Nikkei 225 Futures lower.
Sources: TradingView, Trading Economics, MT Newswires, Reuters.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
Disclaimer: Trive South Africa (Pty) Ltd (hereinafter referred to as “Trive SA”), with registration number 2005/011130/07, is an authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act, 37 of 2002. Trive SA is authorised and regulated by the South African Financial Sector Conduct Authority (FSCA) and holds FSP number 27231. Trive Financial Services Ltd (hereinafter referred to as “Trive MU”) holds an Investment Dealer (Full-Service Dealer, excluding Underwriting) Licence with licence number GB21026295 pursuant to section 29 of the Securities Act 2005, Rule 4 of the Securities Rules 2007, and the Financial Services Rules 2008. Trive MU is authorized and regulated by the Mauritius Financial Services Commission (FSC) and holds Global Business Licence number GB21026295 under Section 72(6) of the Financial Services Act. Trive SA and Trive MU are collectively known and referred to as “Trive Africa”.
Market and economic conditions are subject to sudden change which may have a material impact on the outcome of financial instruments and may not be suitable for all investors. Trive Africa and its employees assume no liability for any loss or damage (direct, indirect, consequential, or inconsequential) that may be suffered. Please consider the risks involved before you trade or invest. All trades on the Trive Africa platform are subject to the legal terms and conditions to which you agree to be bound. Brand Logos are owned by the respective companies and not by Trive Africa. The use of a company’s brand logo does not represent an endorsement of Trive Africa by the company, nor an endorsement of the company by Trive Africa, nor does it necessarily imply any contractual relationship. Images are for illustrative purposes only and past performance is not necessarily an indication of future performance. No services are offered to stateless persons, persons under the age of 18 years, persons and/or residents of sanctioned countries or any other jurisdiction where the distribution of leveraged instruments is prohibited, and citizens of any state or country where it may be against the law of that country to trade with a South African and/or Mauritius based company and/or where the services are not made available by Trive Africa to hold an account with us. In any case, above all, it is your responsibility to avoid contravening any legislation in the country from where you are at the time.
CFDs and other margin products are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how these products work and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. See our full Risk Disclosure and Terms of Business for further details. Some or all of the services and products are not offered to citizens or residents of certain jurisdictions where international sanctions or local regulatory requirements restrict or prohibit them.
