Asian Shares Show Resilience Despite Risks

Asian shares were set to end the month on a positive note, despite the week being filled with significant economic releases, central bank meetings, and earnings updates from major companies like Amazon and Apple. Japanese bond yields posed a potential risk, but Chinese blue chips remained unfazed and saw gains of 1.6% in July.

The initial market boost came from favorable U.S. data showing a decrease in wage costs and core inflation, leading investors to hope that the Federal Reserve's tightening measures were coming to an end.

Investors were still digesting the impact of the Bank of Japan's surprise decision to lift the lid on bond yields, signaling a departure from its ultra-easy monetary policies. While the central bank maintained ultra-low interest rates, it made its yield curve control policy more flexible, expressing concerns about the side effects of prolonged monetary easing.

Japan's factory output improved in June for the first time in two months, reflecting growing confidence among manufacturers due to strong demand. The country, like others, is relying on domestic consumption to support growth amidst the risk of a global recession.

On the other hand, China's manufacturing activity contracted for a fourth straight month in July, and the services and construction sectors were also on the verge of contraction, posing a threat to growth prospects for the third quarter. Weak global economic conditions and a slowdown in local demand were contributing factors, along with weakness in China's real estate sector.

Despite the challenges, expectations remained high for stimulus measures from Beijing to support the post-pandemic recovery in the second largest economy. Chinese markets experienced a sharp rally in anticipation of more policy support from officials.

In conclusion, Asian shares were looking resilient, with Chinese blue chips performing well in July. However, the rising Japanese bond yields and the ongoing weakness in China's manufacturing activity posed risks to the region's markets. Investors were closely monitoring central bank actions and economic indicators while anticipating further stimulus measures from the Chinese government to support economic recovery. Due to the prevailing circumstances, it is anticipated that the overall upward momentum of Asian stocks will encounter limitations in the near term.

Data for Technical Analysis (5H) CFD JP225 Nikkei 225 Futures - Sep 23

Resistance : 33301.9, 33323.1, 33357.5

Support : 33233.1, 33211.9, 33177.5          

5H Outlook

Source: Investing.com                                        

Buy/Long 1 If the support at the price range 33203.1 - 33233.1 is touched, but the support at 33233.1 cannot be broken, the TP may be set around 33302.5 and the SL around 33193.0, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 33301.9 - 33331.9, TP may be set around 33357.5 and SL around 33223.0, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 33301.9 - 33331.9 is touched, but the resistance 33301.9 cannot be broken, the TP may be set around 33212.5 and the SL around 33341.9, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 33203.1 - 33233.1, TP may be set around 33177.5 and SL around 33312.0, or up to the risk appetite.       

Pivot Points Aug 01, 2023 03:50AM GMT

Sources: Investing 1, Investing 2