Nikkei hits record high as USD/JPY, silver price rally
Technical analysis of the Nikkei 225 as it rallies to a record high, accompanied by a swift USD/JPY and silver advance.
Macro update
Wall Street posts modest gains:
United States (US) equity markets closed slightly higher, with the S&P 500 up 0.2% at an intraday record and the Nasdaq 100 gaining 0.5%, underpinned by strength in technology stocks and Walmart.
Walmart boosts index performance:
Walmart shares rose 2.7% after confirmation it will join the Nasdaq 100 on 20 January, lifting both the Nasdaq and S&P 500 as investors positioned for anticipated passive inflows.
Financials under pressure:
Bank and consumer finance stocks lagged after President Trump proposed a one-year cap on credit card interest rates at 10%, dragging the S&P financials sector down 1.2%.
Fed independence concerns fade:
Markets largely looked past reports of a Justice Department investigation into Federal Reserve (Fed) Chair Jerome Powell, viewing the issue as a known risk and keeping the focus on earnings and economic data.
Asia rallies on weaker yen:
Japan’s Nikkei 225 jumped more than 3% to fresh record highs as the yen slid to multi-year lows, while South Korean and Taiwanese markets also set records and Chinese blue chips climbed to a four-year high.
Data and earnings ahead:
Attention now turns to US consumer price index (CPI), with core inflation expected around 2.7%–2.8%, and the start of fourth quarter (Q4) earnings season led by major US banks, where guidance risk remains elevated.
Nikkei 225 hits record high
The Nikkei 225 rallied by over 3% to a record high amid Japanese February snap election speculation and a weakening Japanese yen, making the country's exports cheaper.
A rise above Tuesday's 53,549 high may lead to the psychological 55,000 region being reached.
Support sits around the previous November record high at 52,637.
Short-term outlook:
Bullish while above the 8 January 51,053 low.
Medium-term outlook:
Bullish while above the 48,235 mid-November low.
Nikkei 225 daily candlestick chart
USD/JPY rallies to 1 1/2 year high
USD/JPY has rallied to levels last traded in July 2024 on snap election speculation with the ¥160.00 region being in focus. If reached, the Bank of Japan (BoJ) may once again intervene, as it has done in previous years in this vicinity.
Immediate minor support sits around the 12 January high at ¥158.20 and more significant support between the November to December highs at ¥157.89 - ¥157.76.
Short-term outlook:
Bullish while above the early January low at ¥156.12.
Medium-term outlook:
Bullish while above the 5 December low at ¥154.35.
USD/JPY daily candlestick chart
Silver trades in record highs
The silver price has risen above its December $84.0301 record high by advancing to $86.2665 - a new all-time high - on Monday.
The next upside target seems to be the psychological $100 region.
Immediate support lies around the December $84.0301 high with further support lurking around the 7 January $82.7706 peak.
Short-term outlook:
Bullish while above the 8 January low at $73.8425.
Medium-term outlook:
Bullish while above the 31 December low at $70.0750.
Silver daily candlestick chart
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