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Important Notice - Fraud awareness
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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 54.76% of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
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JP225 denied by resistance level 27938.8

The Japanese index JP225 has faced some price rejection at the resistance point seen at 27938.8 during the Asian session today. The bears seemed to resist higher price movement at this level after three weeks of a strong bullish trend. The market eagerly awaits the release of monetary policy minutes from the BoJ to be released tomorrow, which will determine the next direction for this index.

The Japanese stock market has proved a safe haven for investors for a considerable period now, especially within the protracted period of an aggressive interest rate hike by the Fed reserve and ECB in the UK. The BoJ has left its interest rate untampered for the past six years.

Notwithstanding the growing concern over inflation, the Bank of Japan (BoJ) has maintained its key short-term interest rate at -0.1% for six consecutive years. 10-year bond yields had been fixed at 0% during the committee meeting earlier this month following an 8-1 vote count.

The committee had further cut its 2022 GDP growth forecast to 2.4% from the 2.9% forecast made earlier in April. They cited this decision as the slowdown in overseas economies and persistent supply chain issues due to the prolonged war in Ukraine.

In a broader perspective covering the Fiscal year (FY) 2023 and 2024, the committee uplifted its budget with a GDP expectation of 2.0% against the earlier projection of 1.9%.

Further, the BoJ raised its inflation forecast for the next quarter to 2.3% from the previous forecast of 1.9%. They were forced to take this decision because of the rising energy cost and other commodities, especially food and durable goods.

The BoJ embarking on Quantitative Easing (QE) by buying unlimited bonds to defend an implicit 0.25% cap every day has boosted the Japanese stock market up to the present moment. Hence the stock index JP225 has performed much better than other countries' stock indexes during the first and second quarters (Q1, Q2) of 2022.

The committee will be expected to provide more insight on how the economy will withstand the rising inflation without hiking the interest rate. Investors often paid great attention to the details of these minutes to determine how sustainable the economy could go in the long term by applying the recent dovish policy. A dovish stance had always favoured the Japanese stock and index market as more funds are pushed into the equity market by the BoJ through Quantitative Easing.

What stocks make up the JP225?

JP225, also known as NIKKEI 225, is one of the most valuable Japanese stocks index primarily traded by investors across the globe. This index comprises the top 225 blue-chip companies listed on Tokyo Stock Exchange. JP225 index is weighted according to the price of each stock, making up the list rather than referring to the market capitalization of the composite stocks as we find in SPX500 today. This means companies with just a few shares but have a high market price on the stock exchange market will make the list of this index irrespective of their market capitalization. Hence, we find the following: the major ten stocks making up the JP225 with their prices also stated.

  • Fast Retailing Co., Ltd. - ¥79,920
  • Tokyo Electron Ltd - ¥45,020
  • Daikin Industries, Ltd. - ¥23,535
  • FANUC Corporation - ¥22,040
  • Shin-Etsu Chemical - ¥16,180
  • Sony - ¥11,705
  • Advantest Corporation - ¥7,500
  • Kyocera Corporation - ¥7,432
  • Meiji Holdings - ¥7,080
  • Eisai - ¥6,043

The calculation of the JP225 index is provided daily by the Nihon Keizai Shimbun, the most prominent business newspaper in Japan.

Where can one trade the Japanese Index JP225?

The best platform to trade the Japanese Index JP225 is the ATFX brokers trading platform. ATFX is an award-winning ECN broker providing user-friendly tools and market analysis for trading the Japanese stock and index market. Traders can hope to make more profits trading the Japanese Index (JP225) by taking advantage of the excellent leverage provided by this broker for trading the JP25 index on their platform.

What is the primary factor that influences the JP225?

The JP225, as we have seen, is highly price-weighted. Hence, its performance is primarily influenced by the strength of the Japanese yen. A weak yen due to a high inflation rate increases the prices of all the stocks making up the JP225, while a strong yen will reduce their prices. Therefore, investors trading the JP225 should always pay great attention to the decisions of the monetary policy committee as their decisions largely influence the yen's performance, which affects the JP225 also.

Last Updated: 25/07/2022

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information 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. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.


 

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