Nikkei up over 2% on the day
An upside break beckons for Japanese stocks with the Nikkei now up over 2% and breach past the topside resistance trendline for the year. Adding to that, the Topix has also risen to its highest in 30 years on the news that Suga will be stepping down:
Suga’s handling of the pandemic has been heavily critiqued by the public and polling figures clearly indicate that. A change of leadership is regarded as a positive for Japanese stocks but it will be tough to position the news in light of the overall situation.
Japanese stocks were among the darling of investors last year as the BOJ bolstered ETF support but that is no longer the case this year. As such, we have seen a more meandering mood since March – rangebound in the Topix, the index that the BOJ focuses on more.
Adding to that is the likelihood that even with a change of premiership, it isn’t likely to spur any major changes on policies in Japan and as such, the politics will remain the same regardless of whoever is in charge.
Nonetheless, one can’t ignore the technicals and this could give buyers room to explore some short-term upside perhaps on a break as seen above.