Japan’s Nikkei slid 0.7 per cent down on Thursday, hurt by a stronger yen after Federal Reserve Chairman Ben Bernanke expressed concern about the U.S. economy, while investors awaited the outcome of the European banking “stress tests” this week. A rally by the yen under pressure shares of exporters, but market analysts big falls are likely in the short term, with the Nikkei losing more than 5 percent in the past four days.
On maps, the Nikkei is slow stochastic – a measure of how the market is oversold and whether it is a short term trend up or down – began to flatten in oversold territory.
“Many people are trading in Japanese shares in the short term players, and for them the effects of price changes is enormous,” said Hajime Nakajima, deputy general manager at Cosmo Securities.
“But short-covering will probably come to the next month after major events, including the results of stress tests and reports profit on its course. When all is said and done, fundamentals have not changed much since last year.”
The benchmark Nikkei. 63.53 N225 points dropped to 9215.30, which one fifth day, while the broader Topix fell 0.5 percent to 824.96.
The results of stress tests, both the overall outcome and that of individual banks will be released on Friday.
Bernanke, in testimony prepared for delivery to the Senate Banking Committee, said the U.S. economy faces “unusually uncertain” outlook.
Although Bernanke said the risk of a new downturn were not high, U.S. stocks retreated as he testified, with great means. DJI. SPX drops more than 1 percent. Some investors were surprised by Fed chief frank acknowledgment of the continuing uncertainty. Others were surprised by the preliminary nature of the Fed’s plans for a further easing.
“Those who had expected more but were disappointed after Bernanke said the Fed stands ready to further monetary policy easing,” said Hiroichi Nishi, general manager of equity marketing at Nikko Cordial Securities.
“But the market is likely to move narrowly after the first slide, because the stocks have already fallen for four days in a row and on maps they have entered a buy zone.”
On the technical front, the Nikkei the MACD, a measure of market momentum, formed a bearish cross, but seems to equalize.
Market participants said the Nikkei is likely to support company is in 9200, just below its close July 1, that was a seven-month closing low. After that the support is around 9091, a low pressure this month, and 9076, a layer placed in November 2009.
EXPORTERS DOWN
The dollar fell 0.5 percent in Asian trade to 86.58 yen, nearly seven months hit low of 86.27 yen last week. Investors fret a stronger yen as it eats into profits when repatriated to exporters.
Digital camera maker Canon Inc (7751.T) fell 1.2 percent to 3315 yen and electronics components maker TDK Corp. (6762.T) slid 3.1 percent to 4875 yen. Honda Motor Co. (7267.T) slid 1.1 percent to 2572 yen.
But Casio Computer Co (6952.T) gained 2.7 percent to 568 yen after the Nikkei business daily said the company may have posted operating profit of approximately 2.5 billion yen in the April-June quarter compared with July 1, 4 billion yen loss in the same period the year before.
Strong sales of high margin products like watches and electronic dictionaries, as a result of promotional efforts throughout the world, seems to have played a large part of the gain, the Nikkei added.
Shionogi & Co. Ltd. (4507.T) jumped 3.5 percent to 1785 yen after the company and partner GlaxoSmithKline (GSK.L) said on Wednesday that they have a new drug against HIV progresses in the final phase of clinical trials, competition ramping in a class of AIDS drugs known as integrase inhibitors.
source:reuters
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