Nikkei extends fall as charts darken, Toyota down
Tuesday, 29 June 2010
TOKYO, June 28 (Reuters): Japan's Nikkei average edged down to its lowest close in more than two weeks Monday as its technical picture darkened, with market players saying the benchmark could test six-month lows hit this month.
Amid thin trade with volume at its lowest in more than four months, the Nikkei's MACD turned down further after a sustained rise. Its slow stochastic, which gives near-term signals on market trends, is flattening in oversold territory.
Market players said a dearth of buying factors could push Tokyo shares still lower ahead of the Bank of Japan's quarterly "tankan" survey of corporate sentiment Thursday and US job figures Friday.
"There's likely to be a bit of a correction this week, given the trend towards a slightly stronger yen, with eyes on currency moves and the tankan," said Takashi Ushio, head of the investment strategy division at Marusan Securities.
"The market may test the six-month low at just under 9,400 and if there's no positive news it could well go even lower."
The benchmark Nikkei slipped 0.5 per cent to 9,693.94, its lowest close since June 10, after falling 1.9 per cent Friday and losing 2.6 per cent over all of last week.
The broader Topix fell 0.8 per cent to 860.80.
The Nikkei broke below its 25-day moving average near 9,780 last week.
"Japanese stocks, including technical indicators, have fallen quite a bit, and the market is not in a position to start climbing on domestic reasons these days, particularly before the election," said Hajime Nakajima, deputy general manager at Cosmo Securities.
Japan's ruling Democratic Party controls parliament's lower house but needs to win a majority in an upper house election on July 11 to avoid policy paralysis.
"Aside from buying on dips, gains in the market are also being kept in check ahead of a series of economic data this week, including US jobs. It seems investors are now looking at the 9,300 levels as the Nikkei's next target," Nakajima said.
Stock investors are anxiously awaiting June jobs data due Friday for clues on how the US economy is faring after recent setbacks including a sharp decline in new home sales last week.
There was little impact from the weekend meeting of the Group of Twenty (G20) rich and developing economies, at which world leaders agreed to take different paths towards ensuring lasting growth and making their banking systems safer.
The market slipped broadly, with blue-chip exporters leading the way.
Although the dollar edged up 0.2 per cent against the yen to 89.38 yen, it was not far from a five-week low of 89.21 hit Friday, a situation that some in the market said was likely to be discouraging investors.
Toyota Motor Corp fell to a 15-month closing low after news it was recalling and temporarily halting sales of its 2010 Lexus HS250h hybrid sedan due to a potential fuel leak problem.
The stock ended down 1.1 per cent at 3,100 yen, after earlier dropping as low as 3,080 yen.
Shares of Mizuho Financial Group, Japan's No 2 bank, extended losses to hit a seven-month low after it said it would raise a slightly higher-than-expected $9.6 billion in a previously flagged global offering that will boost its shares outstanding by 38 per cent.
Amid thin trade with volume at its lowest in more than four months, the Nikkei's MACD turned down further after a sustained rise. Its slow stochastic, which gives near-term signals on market trends, is flattening in oversold territory.
Market players said a dearth of buying factors could push Tokyo shares still lower ahead of the Bank of Japan's quarterly "tankan" survey of corporate sentiment Thursday and US job figures Friday.
"There's likely to be a bit of a correction this week, given the trend towards a slightly stronger yen, with eyes on currency moves and the tankan," said Takashi Ushio, head of the investment strategy division at Marusan Securities.
"The market may test the six-month low at just under 9,400 and if there's no positive news it could well go even lower."
The benchmark Nikkei slipped 0.5 per cent to 9,693.94, its lowest close since June 10, after falling 1.9 per cent Friday and losing 2.6 per cent over all of last week.
The broader Topix fell 0.8 per cent to 860.80.
The Nikkei broke below its 25-day moving average near 9,780 last week.
"Japanese stocks, including technical indicators, have fallen quite a bit, and the market is not in a position to start climbing on domestic reasons these days, particularly before the election," said Hajime Nakajima, deputy general manager at Cosmo Securities.
Japan's ruling Democratic Party controls parliament's lower house but needs to win a majority in an upper house election on July 11 to avoid policy paralysis.
"Aside from buying on dips, gains in the market are also being kept in check ahead of a series of economic data this week, including US jobs. It seems investors are now looking at the 9,300 levels as the Nikkei's next target," Nakajima said.
Stock investors are anxiously awaiting June jobs data due Friday for clues on how the US economy is faring after recent setbacks including a sharp decline in new home sales last week.
There was little impact from the weekend meeting of the Group of Twenty (G20) rich and developing economies, at which world leaders agreed to take different paths towards ensuring lasting growth and making their banking systems safer.
The market slipped broadly, with blue-chip exporters leading the way.
Although the dollar edged up 0.2 per cent against the yen to 89.38 yen, it was not far from a five-week low of 89.21 hit Friday, a situation that some in the market said was likely to be discouraging investors.
Toyota Motor Corp fell to a 15-month closing low after news it was recalling and temporarily halting sales of its 2010 Lexus HS250h hybrid sedan due to a potential fuel leak problem.
The stock ended down 1.1 per cent at 3,100 yen, after earlier dropping as low as 3,080 yen.
Shares of Mizuho Financial Group, Japan's No 2 bank, extended losses to hit a seven-month low after it said it would raise a slightly higher-than-expected $9.6 billion in a previously flagged global offering that will boost its shares outstanding by 38 per cent.