The Upward Path for Japanese Stocks
The Japanese Nikkei 225 Index continues its upward trend for the sixth day in a row, recording 35,815 points today, which is its highest level since 1990, as we have not seen these levels in 34 years. It has also risen about 7% since the beginning of this year until today. This index outperforms most global stock indices.
Japan's Topix index also rose, recording 2,490 points today, also its highest level in 34 years.
These remarkable rises in Japanese stocks are due to several factors, the most important of which are:
? The continuation of the accommodative monetary policy by the Central Bank of Japan, which supports the Japanese economy by relying on low, zero interest rates.
? The weakness of the Japanese yen, which encourages investors holding foreign currencies to invest in Japanese markets.
? The decline in the ten-year bond yield, which is currently at levels of 0.60%.
? Weak economic data in China, which had a positive impact on Japanese markets.
However, despite all this positive sentiment in Japanese stocks, caution remains present, especially with the possibility of the monetary policy of the Central Bank of Japan shifting from accommodative to tightening, meaning raising interest rates this year, which in turn weakens Japanese stocks.
It seems that technical indicators may support the Nikkei 225 index in the next stage for several reasons:
First: The regularity and upward trend of the 20,50, and 200 day moving averages.
Second: The Relative Strength Index (RSI), which currently records 77 points, meaning that it is in the overbought area, which indicates upward momentum for the Nikkei 225 index.
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Third: The MACD indicator is in blue, which exceeds the SIGNAL LINE in orange.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice.
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