Nikkei depreciated to new 6-month low on Wall St decline
April 14, 2014 7:41 am
Tokyo stocks sagged down to a fresh six-month low on Monday as market sentiment continued to be fragile after a rocky session on Wall Street and on surging tensions in Ukraine.
Bargain hunting in huge caps like Toyota Motor Corp. provided some support and aided the benchmark Nikkei slash down earlier pullbacks.
The Nikkei average depreciated 0.1 percent at 13,944.43 at the midday break after sliding as low as 13,885.22, its weakest mark since October 9. It is down 15 percent so far this year.
The index plunged 7.3 percent last week, its largest weekly decline since the week after the March 2011 earthquake and tsunami.
Last week’s pullback has made some huge caps relatively cheap, with Toyota now exchanging at under 10 times its profits. Some technical indicators also indicated a probability of short-term bounce back, with the Nikkei’s 14-day relative strength index in almost 30, which marks oversold territory.
“Dip-buying in some large-cap stocks is supporting the market,” said Yasuo Sakuma, portfolio manager at Bayview Asset Management.
Toyota climbed 3.3 percent and was the second-most purchased stock on the main board. Mitsubishi UFJ Financial Group Inc bolstered 2.3 percent.
The Topix Core 30, which consists of large-cap shares, rallied 0.8 percent, led by hikes in banks.
“However, it doesn’t mean the market is turning bullish. There appears to be selling in mid- and small-cap stocks from long-only mutual funds. Many market players are sitting on the sidelines for now, waiting for cues from annual earnings guidance,” Sakuma added.
Japanese firms are due to report profits later this month.
Indeed, the overall market mood was bleak after Wall Street stocks backslide on Friday, with biotech and other “momentum” stocks again leading the Nasdaq steep drop and an unsatisfactory results from JPMorgan pulling down banks.
Surging tensions in Ukraine also weighed on global investor sentiment. Ukraine has given pro-Russian separatists a Monday morning deadline to disarm or face a “full-scale anti-terrorist operation” by its armed forces, bolstering the risk of a military confrontation with Moscow.
Still, many market traders were hopeful that Japanese shares’ relatively cheap valuations and expectations of more easing by the Bank of Japan would eventually support the market.
“It seems like the notorious ‘Sell in May (and go away)’ season arrived early this year, suggesting that the summer rally may begin earlier than July,” said Masatoshi Kikuchi, pan-Asian chief equity strategist at Mizuho Securities.
Other outstanding movers involve Sharp Corp, which retreated as much as 10 percent and hit a five-month low. The Asahi newspaper said Sharp, Japan’s biggest display maker, is considering another issue of new shares that could raise around 200 billion yen ($2 billion) to refresh its depleted capital base.
The broader Topix spiked 0.5 percent up to 1,139.41 in thin trade, with trading volume at 30 percent of the full daily average for the past 90 days.
The JPX-Nikkei Index 400, a currently introduced gauge comprised of firms with a greater return on equity and robust corporate governance, rallied 0.4 percent to 10,368.85.
The material has been provided by InstaForex Company – www.instaforex.com
Tokyo stocks sagged down to a fresh six-month low on Monday as market sentiment continued to be fragile after a rocky session on Wall Street and on surging tensions in Ukraine.
Bargain hunting in huge caps like Toyota Motor Corp. provided some support and aided the benchmark Nikkei slash down earlier pullbacks.
The Nikkei average depreciated 0.1 percent at 13,944.43 at the midday break after sliding as low as 13,885.22, its weakest mark since October 9. It is down 15 percent so far this year.
The index plunged 7.3 percent last week, its largest weekly decline since the week after the March 2011 earthquake and tsunami.
Last week’s pullback has made some huge caps relatively cheap, with Toyota now exchanging at under 10 times its profits. Some technical indicators also indicated a probability of short-term bounce back, with the Nikkei’s 14-day relative strength index in almost 30, which marks oversold territory.
“Dip-buying in some large-cap stocks is supporting the market,” said Yasuo Sakuma, portfolio manager at Bayview Asset Management.
Toyota climbed 3.3 percent and was the second-most purchased stock on the main board. Mitsubishi UFJ Financial Group Inc bolstered 2.3 percent.
The Topix Core 30, which consists of large-cap shares, rallied 0.8 percent, led by hikes in banks.
“However, it doesn’t mean the market is turning bullish. There appears to be selling in mid- and small-cap stocks from long-only mutual funds. Many market players are sitting on the sidelines for now, waiting for cues from annual earnings guidance,” Sakuma added.
Japanese firms are due to report profits later this month.
Indeed, the overall market mood was bleak after Wall Street stocks backslide on Friday, with biotech and other “momentum” stocks again leading the Nasdaq steep drop and an unsatisfactory results from JPMorgan pulling down banks.
Surging tensions in Ukraine also weighed on global investor sentiment. Ukraine has given pro-Russian separatists a Monday morning deadline to disarm or face a “full-scale anti-terrorist operation” by its armed forces, bolstering the risk of a military confrontation with Moscow.
Still, many market traders were hopeful that Japanese shares’ relatively cheap valuations and expectations of more easing by the Bank of Japan would eventually support the market.
“It seems like the notorious ‘Sell in May (and go away)’ season arrived early this year, suggesting that the summer rally may begin earlier than July,” said Masatoshi Kikuchi, pan-Asian chief equity strategist at Mizuho Securities.
Other outstanding movers involve Sharp Corp, which retreated as much as 10 percent and hit a five-month low. The Asahi newspaper said Sharp, Japan’s biggest display maker, is considering another issue of new shares that could raise around 200 billion yen ($2 billion) to refresh its depleted capital base.
The broader Topix spiked 0.5 percent up to 1,139.41 in thin trade, with trading volume at 30 percent of the full daily average for the past 90 days.
The JPX-Nikkei Index 400, a currently introduced gauge comprised of firms with a greater return on equity and robust corporate governance, rallied 0.4 percent to 10,368.85.
The material has been provided by InstaForex Company – www.instaforex.com
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