The Nikkei is moving to a new 21-year high on Friday morning, despite the Yen strengthening against the USD for a second consecutive day and a weak lead-in from Wall Street overnight.
Heading into the lunch hour in Tokyo the Nikkei is trading up by 0.33%, with the broader Topix holding a much slimmer 0.06% gain.
Currently the Nikkei is holding above the 21,000 level, which will be very bullish for the market if the index can hold that level to the close. That 21,000 level is very long-term resistance stretching back to 1993. It was tested and held in 1994, 2000 and 2015 and just briefly surpassed in 1996, so you know investors have a very close eye on this key resistance level.
Given the stronger Yen, the Japanese export sector is lower today, as are banking and insurance names, but the retail sector is performing very strongly and semi-conductor stocks are rising. Also losing is the oil sector after crude fell overnight.
Next week will see a meeting of Japanese and U.S. officials to discuss bilateral free trade. The U.S. is expected to attempt to have Japan open its automobile and agriculture industries in a bid to lower its trade deficit with the third largest trade partner of the U.S., but Japan can benefit by inclusion in U.S. infrastructure projects.
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