Japan's Nikkei share average fell to its lowest close in two months on Wednesday in thin trade as worries about the euro zone debt crisis and a slowdown in the U.S. economy deterred investors from moving in to take advantage of cheap valuations.
|||Japan's Nikkei share average fell to its lowest close in two months on Wednesday in thin trade as worries about the euro zone debt crisis and a slowdown in the U.S. economy deterred investors from moving in to take advantage of cheap valuations.
With share prices under pressure globally and threatening to fall below key chart levels, reports that Toyota will return to pre-quake production levels earlier than previously thought failed to ignite broader buying in battered manufacturers.
The benchmark Nikkei average closed down 0.6 percent at 9,422.88, its lowest close since March 18, while the broader Topix shed 0.2 percent to 817.74.
Immediate support for the Nikkei remains around 9,405, an intraday low hit on April 19.
“Since the Nikkei is almost trading at book value, it's hard to expect it to fall much from here. I'd think 9,300 is the bottom in the near term,” said Toshiyuki Kanayama, market analyst at Monex Securities.
Shares on the Tokyo stock exchange's main board are trading at book value, while stocks in the S&P 500 Index trade at 2.2 times their book value and Hong Kong shares trade at 1.8 times, according to Thomson Reuters Starmine.
But investors had few incentives to buy at this point as worries about the euro zone's debt troubles and talk of a possible slowdown in the U.S. and other economies helped to drive down global shares, with many stock indexes slipping below their recent trendlines.
Trading volume on the first section of the Tokyo Stock Exchange fell to the lowest in a month, with 1.60 billion shares changing hands, about 10 percent less than last week's average of 1.78 billion. Declining shares outnumbered advancing shares by 1,027 to 465.
Hiroichi Nishi, general manager at SMBC Nikko Securities, said the Nikkei looked oversold after having shed nearly 6 percent from its recent high of 10,004, marked on May 2.
CAUTIOUS NOTE
Analysts said that if it looks like the Nikkei will stay below 9,500, Bank of Japan buying of exchange traded funds (ETFs) may kick in, which would help to support the market.
The central bank said it bought ETFs worth about 19.4 billion yen ($236 million) on Monday. The BOJ has bought a total of 298.2 billion yen of ETFs since last December.
Some analysts said certain large-cap shares such as exporters may be bought on dips as they look undervalued compared with their global peers.
But many analysts think global share prices will need to regain momentum for that to happen, as Japanese shares are still seen suffering from uncertainty over how quickly the economy can recover from damage by the March 11 earthquake.
The latest dose of news out of Europe was far from reassuring, however, with Europe's policy options to avert a Greek default narrowing fast after the ECB and ratings agencies warned against even voluntary debt rescheduling.
“Trading may stay on a cautious note as long as these external factors affect the mood,” said Yumi Nishimura, a senior market analyst at Daiwa Securities.
Toyota gained 2.2 percent to 3,315 yen after the Nikkei business daily and other domestic media said the automaker plans to restore domestic production next month to as much as 90 percent of targets set before the March earthquake, as parts supplies improved more quickly than expected.
Oil stocks gained after Goldman Sachs raised its price forecasts for Brent crude, pushing oil prices up about 2 percent in New York, although the market relinquished some of those gains in Asia.
Inpex Corp rose 2.6 percent to 548,000 yen and Idemitsu Kosan Co rose 0.8 percent to 8,540 yen.
But Sony Corp fell 1.5 percent to 2,236 yen after the company said on Tuesday that its websites in four countries had been hacked, in the latest of a series of security breaches. - Reuters
Source: http://www.iol.co.za/nikkei-hits-2-month-closing-low-1.1073685
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