Despite persisting monetary policy worries, the Nikkei 225 index (NI225) has established a commanding advantage over other global indices. As of this writing, it has reached a peak of 28,718, its highest point since August. Simply looking at the data, you can see that it has increased by more than 11 percent from its yearly low.
Nikkei index rose further as traders responded favourably to the latest GDP data from Japan. The government statistics office reports that growth stalled entirely in the fourth quarter of this year. A 0.2% increase in economic activity was predicted by experts. Year-over-year economic growth came in at 0.1%, below the median forecast of 0.8%.
Investment spending in Japan fell by 0.5% in the quarter, weighing down the country’s GDP. Both domestic demand and foreign demand grew, with the former increasing by 0.3% and the latter by 0.4% respectively.
Based on these data, the Bank of Japan is expected to maintain the status quo at next week’s meeting. Experts predict that Haruhiko Kuroda will decide to maintain the current interest rate structure in his final conference. He will probably adjust the yield curve policy that is costing the nation billions of dollars.
Meanwhile, the reopening of Chinese markets and warming of ties with South Korea have been beneficial to the Nikkei stock index. There is a significant amount of commerce conducted by Japanese firms in China. Chinese officials predict a 5% increase in GDP this year, up from a 3% increase in 2022. Japan stands to gain from this upswing.
The year has been a good one for many Japanese corporations. This year, Kobe Steel, an industry leader, has seen its stock price increase by more than 73%. Other major components of the Nikkei 225 index, including Citizen Holdings, Dai Nippon Printing, NTN Corp, and Advantest, have all increased by more than 355% this year. Famous manufacturers have banded together, too. Mazda, Nissan, and Mitsubishi are among them.
The Nikkei index has been in an impressive bullish pattern over the past few weeks, as shown by the 4H chart. My prior prediction, which you can read about here, was accurate. On November 24th, it hit a peak of $28,518 and faced significant resistance there, which it eventually overcame. The Murrey Math Lines indicate that the indicator has overshot its target area and is now at 28,515.
Even though the RSI has reached severe overbought levels, it has managed to stay above the 50-period exponential moving average. As a result, the index is expected to decline in the coming days as investors seek to take profit near the key support level at 27,826, the high reached on February 13.
