Japan’s Inflation Sees Modest Rise in June, Asian Markets Experience Mixed Trends.
Introduction
In June, Japan experienced a modest increase in inflation, leading to mixed trends in Asian markets. The Asia-Pacific markets remained neutral as traders closely analyzed the June consumer price index data for Japan. Official figures showed that the nation’s core inflation rate, excluding the cost of fresh food, stood at 3.3%, aligning with economists surveyed by Reuters. This rate surpasses the Bank of Japan’s 2% objective and represents a slight rise from May’s figure of 3.2%. However, it’s essential to note that Japan’s overall inflation rate also climbed from 3.2% in May to 3.3% in June.
Asian Markets React to Uncertain Indicators
In the final hour of trading on Friday, the Hang Seng index in Hong Kong exhibited a 0.71% increase. Nevertheless, fund managers displayed less confidence in the Chinese economic recovery for the year, given shaky indications and limited official assistance. Economists at Bank of America predict that the local stock market may touch 11-year lows due to the slowdown in the post-COVID economic recovery.
China’s Weakness Impacts Larger Asian Markets
The situation in China impacts larger Asian markets, as many of them rely heavily on China as a significant trading hub. One notable example is Taiwan Semiconductor Manufacturing Co (TW:2330) (NYSE: TSM), the most valuable corporation in Asia. The company experienced a 3% decline in its second-quarter profit and issued a warning about potential further declines in sales and profits for the rest of the year. This sent a ripple effect through the markets.
Sunny Optical Technology Group Faces Challenges
Sunny Optical Technology Group (HK:2382), a company that produces smartphone components for several major brands, announced a grim forecast of a potential 70% profit decline in the first half of 2023. As a result, its shares plummeted by 1%, adding to the uncertainties in the Asian markets.
Hang Seng Technical Analysis – A Promising Upswing?
Hang Seng’s Trading Status
Currently, the Hang Seng index is trading in an up channel, signifying a positive trend. It is also positioned above the 5&50 SMA (Simple Moving Average), further reinforcing the bullish sentiment. The RSI (Relative Strength Index) is in the buying zone, suggesting potential further gains, while the Stochastic indicator indicates a positive trend. Immediate resistance is noted at 19112, while the immediate support level stands at 19043.
Trading Hang Seng This Week
Following a period of decline, the Hang Seng index has reversed its course and begun trading upwards. It found support near the 50% Fibonacci zone, signaling a potential bullish movement. Currently, Hang Seng is testing a significant resistance level, forming a bullish flag-like pattern. Should this resistance level be breached, further upside is foreseeable.
Trade Suggestion
- Entry Point: 19157
- Target: 19312
- Stop Loss: 19051
Conclusion
The Asian markets witnessed a mixed trend as Japan’s inflation rate recorded a modest rise in June. Despite the uncertainty surrounding the Chinese economic recovery, the Hang Seng index displayed positive movement. However, larger Asian markets remain cautious due to China’s weakness and its impact on various industries. Companies like Taiwan Semiconductor Manufacturing Co and Sunny Optical Technology Group faced challenges, affected investor confidence. As the markets continue to navigate these conditions, traders closely monitor key resistance and support levels, hoping to capitalize on potential bullish opportunities.