Nikkei falls to 2-week low as stronger yen, disappointing earnings hurt

Fri Jul 26, 2013 7:26am IST

* Nikkei should see support at 25-day moving average -
analysts
    * Yahoo Japan, Advantest disappoint market
    * CPI seen positive but failed to support decline

    By Ayai Tomisawa
    TOKYO, July 26 (Reuters) - Japan's Nikkei share average fell
to a two-week low on Friday morning, as selling accelerated on
the back of a firmer yen and disappointing quarterly earnings
from the likes of Canon Inc and Advantest Corp
. 
    The Nikkei fell 1.9 percent to 14,288.92 in
mid-morning trade after slipping to a low of 14,236.46 earlier,
the lowest level since July 9.
    Analysts said that the Nikkei's immediate support is seen at
its 25-day moving average of 14,119.61.
    The first-quarter earnings season is at its peak, with more
blue chips reporting their results next week. Analysts said that
investor sentiment has turned sour on the results after
companies like Canon and Shin-Etsu Chemical Co 
disappointed the market on the previous day. Canon extended its
losses, down 1.9 percent.
    On Friday, Yahoo Japan Corp fell as much as 5.7
percent after the company Posted worse-than-expected earnings.
    Advantest tumbled 8.7 percent after reporting an operating
loss of 3.32 billion yen for the April-June quarter.
    Exporters took a hit as the yen rose against the dollar,
with Toyota Motor Corp falling 2.0 percent, Sony Corp
 dropping 1.8 percent and Honda Motor Co 
shedding 2.1 percent.
    Market players said that investors are reluctant to take
large positions for now.
    "Trading may be led by futures as many investors are
reluctant to take positions in the cash market until they see
all the earnings outcomes," said Yutaka Miura, a senior
technical analyst at Mizuho Securities.
    Investors will also watch to see whether the dollar holds
above 99 yen during the day, given a greater focus on dollar-yen
levels as exporters release their results. A weak yen lifts
exporters' competitiveness overseas as well as their profits
when repatriated.
    "Since the weak yen has been a major factor to buy into the
Japanese market, exporters' first quarter earnings will likely
drive investor sentiment from now on in deciding whether they
want to buy more or retreat," said Hikaru Sato, senior technical
analyst at Daiwa Securities. 
    The dollar last traded at 99.25 yen. 
    The Topix dropped 1.7 percent to 1,181.34, with 32
of its 33 subsectors in negative territory.
    Before the market opened, Japan's June core consumer price
index came in at 0.4 percent, just above forecasts for 0.3
percent.
    Economists said the data was positive for the stock market
in the mid to long term. 
    "The rise in the CPI is mainly due to the weaker yen, which
is raising import costs, so it's too early to be overly
optimistic. But we can say that 'Abenomics' is very much in
play," said Nobuhiko Kuramochi, strategist and economist at
Mizuho Securities.
    The Nikkei has dropped around 10 percent from the year's
peak at 15,942.60 hit on May 23, but it is up 38 percent this
year on the back of the weaker yen as Prime Minister Shinzo Abe
continues to drive an aggressive policy mix of fiscal and
monetary stimulus.
  • Most Popular
  • Most Shared

DEFENCE

REUTERS SHOWCASE

Canonisation

Canonisation

Pope declares sainthood of two Indians, four Italians.  Full Article 

Stake Sale Strike

Stake Sale Strike

Coal India trade unions call off strike in victory for Modi.  Full Article 

Markets Weekahead

Markets Weekahead

Ride the bull with a finger on the ejector button.  Full Article 

Arms Purchase

Arms Purchase

India approves $2.6 bln mounted gun purchase - official.  Full Article 

Interview with Bulgari CEO

Interview: Bulgari CEO

Bulgari CEO: we shouldn’t have left India so we’re back  Full Article 

Formula One

Formula One

Hamilton takes second F1 title in style.  Full Article 

Available For Remake

Available For Remake

Bollywood finally wants to pay the price for remakes  Full Article 

Davis Cup

Davis Cup

Vintage Federer seals first Davis Cup for Switzerland.  Full Article 

Movie Review

Movie Review

"Happy Ending" is old wine in an older bottle  Full Article 

Reuters India Mobile

Reuters India Mobile

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