Skip to content

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Japan’s Nikkei 225 on watch with impending leadership change

The Nikkei 225 Index has jumped close to 1.6% to start the week. What can we look out for?

Source: Bloomberg

What to expect with Japan Prime Minister Yoshihide Suga’s resignation

Japan Prime Minister Yoshihide Suga has announced not to seek re-election as ruling-party leader last week, marred by a sinking approval rating partly due to perceived inadequacy for his Covid-19 responses. The race is therefore on to find the next successor, with less than a month to go before the party’s leadership appointment on 29 September. Based on an opinion poll conducted by Kyodo News, the top contender thus far is Taro Kono, Japan’s Covid-19 vaccine minister, with a 31.9% approval rating. This is followed by Shigeru Ishiba, who came in second with a 26.6% rating. The potential views of some of the key contenders are summarised below.

*Opinion poll by Kyodo News was conducted on 4-5 September, asking 1,071 randomly-selected eligible voters on their choice for next prime minister.

While public opinions are important, the contenders also need to seek factional support, which seems highly uncertain at the moment. Highly-watched factions, such as the Shikōkai and Hosoda factions, are yet to commit to their candidate of choice and the rally for support is expected to be highly watched over the coming weeks.

As Suga’s rising unpopularity partly stems from perceived inability on his part to manage the Covid-19 pandemic, the new prime minister will seek to address this issue. This seems to bring high hopes of further economic stimulus to aid businesses and also bolstering of healthcare systems to tackle elevated Covid-19 cases. There may be some resistance with Japan’s government debt at 256% of GDP, but with ultra-low rates and the Bank of Japan (BoJ) holding more than half of all government bonds, the elevated debt may seem less of a problem. Other standpoints under a new leadership may remain largely unchanged, with Japan’s monetary policies on hold and tough stance towards China to continue.

Technical analysis – Japan 225

The Japan 225 index has broken above the upper trendline of its descending triangle pattern last week, signalling a shift in sentiments to the upside. This comes after its moving average convergence divergence (MACD) indicator forms a higher low, suggesting that downside momentum could be weakening. Bullish sentiments are riding on the expectations of an economic stimulus package to combat the Covid-19 pandemic from the new leadership. Currently, prices are hovering around 29,500, which will provide as near-term support. Resistance may be at 30,200 resistance level, where the index was weighed down on previous two occasions.

Source: IG Charts

Technical analysis – USD/JPY

The USD/JPY (大口) has largely been trading in a rectangle pattern since July this year, with a flat-lined MACD indicator suggesting ranging movement for now. After an initial bounce in reaction to the political catalyst, the gains were quickly pared back along the rest of the day. Near-term support may seem to be at 109.00, where the lower base of the rectangle pattern may serve as support, as it has been for the previous three occasions. Resistance may be at 110.60, near the upper range of the rectangle.

Source: IG Charts

This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Take a position on indices

Deal on the world’s major stock indices today.

  • 1-point spread on the FTSE 100 and Germany 40
  • The only provider to offer 24-hour pricing
Find out more

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Monday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

You might be interested in…

<h3>How much does trading cost?</h3>
<h3>Find out about IG</h3>
<h3>Plan your trading</h3>

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.