Nikkei slips off one-month highs on profit-taking
Wednesday, 23 June 2010
TOKYO, June 22 (Reuters): Japan's Nikkei average slipped 1.2 per cent Tuesday as profit-taking emerged after a bounce to a one-month high the day before and foreign investors turned sellers.
Analysts said the market took a breather after recent rises, including last week's gain of three per cent, the best weekly performance in three months, as well as Monday's surge, but that its essential upward trend looked unchanged.
The benchmark fell below a chart retracement level with euphoria over the yuan's rise ebbing, but many saw support intact at around 9,800, the Nikkei's 25-day moving average.
"Sentiment overall appears to have turned rather positive, now that it appears the euro may have bottomed out, and this can lead the market suddenly and sharply higher, the way we saw yesterday on the yuan news," said Hideyuki Ishiguro, a strategist at Okasan Securities.
In light trade, the benchmark Nikkei fell 125.12 points to 10,112.89, below a 38.2-per cent retracement at 10,155 of the fall from its April high of 11,408.17 to its June low of 9,378.23.
The broader Topix shed 0.9 per cent to 894.56.
Some analysts said that the Nikkei needed to consolidate above 10,200, which falls a bit below the level of its 50-week moving average, to resume rising again.
"Breaking above this is extremely important, but we need a bit more market energy and volume to do so," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.
"But today we're seeing a lot of foreign selling. There's no follow-through from yesterday."
European investors were short-covering Nikkei futures Monday, lifting the cash market as well, analysts said.
The yuan spot exchange rate Monday rose to its highest since July 2005, sending Asian stocks to a five-week high on hopes for greater Chinese buying power.
But the euphoria faded later in the day, with Wall Street dipping, leaving the Nikkei -- which market players said had risen mainly on short-covering in thin volume -- vulnerable.
On Tuesday, China's central bank set the yuan's daily mid-point at the highest level since its revaluation in July 2005. But the Nikkei shrugged it off.
Analysts said the market took a breather after recent rises, including last week's gain of three per cent, the best weekly performance in three months, as well as Monday's surge, but that its essential upward trend looked unchanged.
The benchmark fell below a chart retracement level with euphoria over the yuan's rise ebbing, but many saw support intact at around 9,800, the Nikkei's 25-day moving average.
"Sentiment overall appears to have turned rather positive, now that it appears the euro may have bottomed out, and this can lead the market suddenly and sharply higher, the way we saw yesterday on the yuan news," said Hideyuki Ishiguro, a strategist at Okasan Securities.
In light trade, the benchmark Nikkei fell 125.12 points to 10,112.89, below a 38.2-per cent retracement at 10,155 of the fall from its April high of 11,408.17 to its June low of 9,378.23.
The broader Topix shed 0.9 per cent to 894.56.
Some analysts said that the Nikkei needed to consolidate above 10,200, which falls a bit below the level of its 50-week moving average, to resume rising again.
"Breaking above this is extremely important, but we need a bit more market energy and volume to do so," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.
"But today we're seeing a lot of foreign selling. There's no follow-through from yesterday."
European investors were short-covering Nikkei futures Monday, lifting the cash market as well, analysts said.
The yuan spot exchange rate Monday rose to its highest since July 2005, sending Asian stocks to a five-week high on hopes for greater Chinese buying power.
But the euphoria faded later in the day, with Wall Street dipping, leaving the Nikkei -- which market players said had risen mainly on short-covering in thin volume -- vulnerable.
On Tuesday, China's central bank set the yuan's daily mid-point at the highest level since its revaluation in July 2005. But the Nikkei shrugged it off.