Nikkei 225 under pressure, bargain hunting at lows

By FXStreet The Japanese benchmark index Nikkei 225 has been under constant pressure ever since the Tokyo open, and after trading at a day low circa 16,450.00, falling as much as -1.40%, the index is now on recovery mode, down 1%, having printed a sizeable bullish reversal bar in the hourly chart in what appears some bargain hunting action.

Japanese trade balance reinvigorates equity sellers

Ahead of today’s Tokyo open, Japan published its latest trade balance, which came at 823.5B vs.540.0B estimate and 754.2B prior, a much better than expected trade surplus, although when looking further into the details, one can notice that the increased surplus was due to a larger than expected fall in imports (-23.3% YoY vs -19.2%), which was accompanied by declining exports as well, coming at -10.1% vs -9.9%.

The data has been perceived as a sign of domestic weakness by investors, and despite shares outside Japan held steady (see MSCI’s index of Asia-Pacific), the Nikkei 225 decoupled from the steadier performance in regional shares indexes.

Japanese data taken at face value?

In order to understand why Japanese equity investors might have been selling out shares quite aggressively today, it is worth reminding readers of the case made last week follwing …read more

Source:: FX Street