Chart of the day - JAP225 (02.08.2024)

The Nikkei 225 index in Japan has extended its losses, dropping 2.70% below the 36,000-point level. The decline from the peaks around 42,500 points now exceeds 16%. This week's downward pressure has been influenced by both domestic and global factors.

On the domestic front, Japan raised interest rates by a record 0.15%, and the Bank of Japan (BoJ) adopted a surprisingly hawkish stance. As a result, there was a dynamic strengthening of the JPY. Bullish expectations could pressure the profits and margins of Japanese exporters.

On the global front, the declines accelerated yesterday following a set of weaker macroeconomic data from the U.S. (higher claims, weak ISM manufacturing), which cast doubt on the real condition of the American economy and caused the yield on 10-year treasuries to fall below 4%.

JAP 225 (D1 Interval)

The index's value dropped by as much as 8.70% over two trading sessions. The scale of the sell-off is comparable to the panic during the COVID-19 pandemic in early 2020. The downward pressure accelerated after breaking through the key support level at 39,400-40,000 points. The nearest target for the current downward move appears to be the 33,800-point level.

Source: xStation 5