After a two-day decline from a 33-year peak, Japan's Nikkei share average rebounded on Friday. The Nikkei index surged 1.61% to 32,149.76 by midday, recovering nearly 4% from Wednesday's 33-year high. Index is on track to complete a nine-week advance, marking its longest winning streak in over five years. Since June 2, it has climbed nearly 2%, extending its advance since April 7 to 17%.
From the fundamental perspective, Nikkei performance is boosted by Japanese GDP data, which showed a growth at an annualized rate of 2.7% in the first quarter of the year, surpassing the earlier estimates of 1.6% made last month.
The two consecutive days of decline were likely just profit-taking from investors after a solid period of index appreciation. Now, with the indexes rebounding, it is a positive sign that bulls are still in power and set the stage for a continuation in the next week. Today, significant contributors to the Nikkei's performance included Uniqlo brand owner Fast Retailing, which jumped 3.85%, and air-conditioning maker Daikin Industries, which rose 3.09%.
The Nikkei 225 (JAP225) index is currently showing a strong bullish momentum, with its price standing at 32,159 points. This comes after the index rebounded from a significant support level at 31,500 points, which indicates a bullish sentiment in the market. If the bullish momentum maintains its strength, we could see the index aiming to test the recent peak at 32,770 points. However, it's important to consider potential downside risks as well. If the bullish momentum weakens, we could see a correction towards the next lower level of 30,600 points.
