Nikkei 225 Tests Resistance as Equities Await US Earnings Season

Asia Pacific Markets Wrap Talking Points

• Equities trade mixed in Asia Pacific trade

• S&P 500 eyeing US earnings season next

• Nikkei 225 upside momentum is weakening

Find out what retail traders equities buy and sell decisions say about the coming price trend!

Asia Pacific benchmark stock indexes traded mixed following a similar session on Wall Street. Ebbing Fed rate cut bets pared an upside gap in the S&P 500, but downside follow-through during the early stages of Friday was lacking.

The Nikkei 225 traded about 0.5% higher into Tokyo close, supported by gains in Fast Retailing which is the parent company of Uniqlo. Australias benchmark ASX 200 fared slightly better, pushed higher by financials. Meanwhile, the Shanghai Composite declined roughly 0.5%.

Looking at currencies, the Australian Dollar declined on a pessimistic RBA Financial Stability review. The pro-risk currency however recovered as it tracked the Nikkei 225 higher. Meanwhile, the anti-risk Japanese Yen weakened.

In the ASEAN FX space, the Singapore Dollar came under selling pressure as well after the MAS cut inflation and growth expectations. Building expectations of a rate cut from the Philippine central bank sent USD/PHP higher as it formed a bullish reversal pattern.

Ahead, first quarter US earnings season begins. Traders will be watching what companies have to say about their outlooks given a slowing global economy. This poses as a downside risk for equities. Rosy University of Michigan sentiment may help offset that.

Nikkei 225 Technical Analysis

The Nikkei 225, using futures to show afterhours trade, rose to test resistance again at 21890. However, negative RSI divergence warns that upside momentum is ebbing and this may precede a turn lower towards support at 21520.

Nikkei 225 Daily Chart