Positioning for short Nikkei, things to get worse before they get better

Strategic Trade / Sell

Kay Van-Petersen

Global Macro Strategist

Instrument: NK225c1
Price Target: Index level 21,660
Market Price: Index level 21,730


Trade tariffs and trade wars are just shifting into higher gear. The combination of potential auto tariffs, a stronger yen and risk-off could set the scene for a triple hit for the Nikkei, which is also struggling technically (it has broken through its 200-day moving average and is failing to hold above 22,000). 

I think its only a question of time before we see the next round of tariffs from the US, and potentially more announcement this Friday or over the weekend. 

Management And Risk Description:

Position is 1x capital, so for the Macro Monday book that is circa $10m.

The potential key risk here is that trade disputes get solved sooner rather than later, leading to a relief rally in the Nikkei. A weaker yen could also complicate manners as that tends to be supportive for the Nikkei.

Trading Plan

For now its putting out a line on the short side on the Nikkei, looking to potentially add to the short at the 22,000 level – if we get there. And then to add a long S&P futures leg, so this is very much building out from a portfolio composition of the Macro Monday trading book.


Entry: 21,730
Stop:  –
Target: 21,660
Time Horizon:  Strategic


-- Edited by

Clare MacCarthy

Nikkei index.                                                                                                                                           Source: Saxo Bank
Nikkei and JPY 5-year.                                                                                                                          Source: Saxo Bank

You can access both of our platforms from a single Saxo account.

A compiled overview of Trade Views provided on Home.saxo can be found here (https://www.home.saxo/en-au/insights/news-and-research/trade-views/report).


Saxo Capital Markets (Australia) Pty Ltd prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed you initial investment.

Please refer to our Analysis Disclaimer, and our Combined Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at https://www.home.saxo/en-au/legal/.