Japan's Nikkei dips, ends four-session winning streak

TOKYO Tue Nov 20, 2012 12:09pm IST

People are reflected on a board showing the Dow Jones average (top) and NASDAQ average of the U.S. outside a brokerage in Tokyo November 7, 2012. REUTERS/Toru Hanai

People are reflected on a board showing the Dow Jones average (top) and NASDAQ average of the U.S. outside a brokerage in Tokyo November 7, 2012.

Credit: Reuters/Toru Hanai

Related Topics

Stocks

   
Priyanka Gandhi Vadra, daughter of Congress party chief Sonia Gandhi, adjusts her flower garlands as she campaigns for her mother during an election meeting at Rae Bareli in Uttar Pradesh April 22, 2014. REUTERS/Pawan Kumar

Election 2014

More than 814 million people — a number larger than the population of Europe — are eligible to vote in the world’s biggest democratic exercise.  Full Coverage 

TOKYO (Reuters) - The Nikkei ended a four-day winning run on Tuesday as investors took profits in exporters, which had rallied on hopes Japan's main opposition party would win next month's election and pressure the central bank for more stimulus steps.

But losses were limited as investors switched into sectors which have lagged the rally, such as telecoms and retailers.

The Nikkei .N225 ended 0.1 percent lower at 9,142.64 after surging 5.7 percent in the previous four sessions, driven by a call by Liberal Democratic Party leader (LDP) Shinzo Abe for the Bank of Japan to further stimulate the ailing economy, including pushing interest rates to zero or below zero.

His campaign has weakened the yen against the dollar, fuelling a bounce in the shares of Japanese exporters, which face sluggish demand for their products amid stuttering global growth.

Exporters that came under pressure on Tuesday included Canon Inc (7751.T), Honda Motor Co (7267.T), TDK Corp (6762.T) and construction machinery maker Komatsu Ltd (6301.T), all down between 0.9 and 1.1 percent.

Panasonic Corp (6752.T) sagged 3.8 percent as investors locked in profits and after Deutsche Bank cut its target price on the consumer electronics maker.

"A lot of the sectors have been overbought out there ... It's just a healthy consolidation," a senior dealer at a foreign brokerage said. "There are still a lot of expectations for the LDP."

In its last meeting before the December 16 election, the Bank of Japan kept monetary policy steady on Tuesday, standing its ground for now in the face of calls from the country's likely next prime minister to pursue "unlimited" easing.

"Investors have started to review what Abe has said and are being careful not to have too many expectations for everything he has said," said Takuya Takahashi, a market analyst at Daiwa Securities. "The market is skeptical that the BOJ would give in to every demand."

The broader Topix .TOPX index was flat at 762.04 in relatively active trade, with 1.87 billion shares changing hands, down from Monday's 2.01 billion but up from last week's average of 1.79 billion.

ROTATION

Mobile operators Softbank Corp (9984.T) and KDDI Corp (9433.T) rose 1.9 and 0.7 percent respectively, while index heavyweight Fast Retailing (9983.T), the owner of casual fashion chain Uniqlo, added 0.3 percent.

Shippers .ISHIP.T rose 1.8 percent as the top performing sector after the Baltic Exchange's main sea freight index .BADI, which tracks rates for ships carrying dry bulk commodities, rose for a seventh straight day on Monday after increased rates in the capsize and panamax shipping segments.

Morgan Stanley MUFG said Japanese equities would benefit from a weaker yen through the expected rise in company earnings per share. The benchmark Nikkei is up 8.1 percent this year, lagging a 10.3 percent rise in the U.S. S&P 500 .INX and a 9.8 percent gain in the pan-European STOXX Europe 600 .STOXX.

"Under a weaker yen scenario, we prefer IT, industrials, discretionary and financials over staples," the brokerage said in a note.

But it added that a soft yen and setting an inflation target would not be enough to change investors' expectations for longer-term return on equity (ROE) or growth in Japan. "The latter depend on fiscal improvement, and on higher nominal GDP, tax revenue and wages," it added.

Japanese stocks carry a 12-month forward ROE of 7.3 percent, much lower than S&P 500's 15 percent and STOXX Europe 600's 12.5, data from Thomson Reuters Datastream showed.

Within the financial sector, NKSJ Holdings (8630.T) sank 4.4 percent after the non-life insurer forecast a full-year net loss of 28 billion yen ($345 million), versus its previous estimate of a profit of 24 billion yen, to reflect a lower assumption for net capital gains due to an increase in impairment losses. ($1 = 81.1350 Japanese yen)

(Additional reporting by Ayai Tomisawa; Editing by Richard Pullin)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Election 2014

Election 2014

Kashmiris wary as Modi challenges for power.  Full Article 

Facebook's Performance

Facebook's Performance

Facebook Q1 revenue grows 72 percent on rising mobile ads.  Full Article 

Earnings Season

Earnings Season

Bharti Infratel Q4 net profit jumps 64 percent.  Full Article 

Monsoon Forecast

Monsoon Forecast

South Asia monsoon seen below-average to average in 2014 - WMO.  Full Article 

Solar Dispute

Solar Dispute

Green groups urge U.S. to drop solar trade case against India.  Full Article 

Oil Imports

Oil Imports

India to make May-July oil payments to Iran - sources.  Full Article 

Rice Exports

Rice Exports

India may cede top rice exporter spot under Southeast Asian price onslaught.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage