Nikkei down 0.8 percent on profit-taking as yen gains

By Elaine Lies

TOKYO (BestGrowthStock) – Japan’s Nikkei average fell 0.8 percent on Tuesday, moving further away from last week’s 18-month highs as a stronger yen led to profit-taking, while chip shares fell on wariness before tech bellwether Intel’s earnings.

But Isuzu Motor’s shares climbed 3 percent after a brokerage upgraded its earnings estimates for the truck maker while Sanyo Electric Co rose on a report that it could see a 50 percent jump in operating profit this financial year.

The yen rose against the euro and the dollar as relief over an aid package for debt-laden Greece turned to caution, while investors were also were also concerned that the Tokyo stock market remained overbought.

“People had thought the whole Greek aid issue was settled, but there’s still a lot of uncertainty, and the market had risen to a level where it was easy for selling to emerge,” said Yutaka Miura, senior technical analyst at Mizuho Securities.

Others said that the market may have entered a period of adjustment that could continue until U.S. and Japanese earnings really pick up steam. Intel Corp, a key tech bellwether, announces results later on Tuesday, while Japanese earnings really take off at the end of the month.

“There’s unlikely to be any change in the predictions for good results, but the recent yen weakening trend may have come to a halt,” said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.

“There’s also no question that the market was overbought.”

In active trade, the benchmark Nikkei shed 90.67 points to 11,161.23, while the broader Topix fell 0.6 percent to 988.44.

The Nikkei’s relative strength index (RSI) has fallen as low as 60 after rising to a high of 76 last week. Anything from 70 and above is considered overbought.

Some longer-term indicators such as MACD have turned bearish, with the MACD line now breaking below the signal line, a move seen as a sell signal.

But sharp falls are not expected, with market players saying support is likely to hold for now near the Nikkei’s 25-day moving average, currently at just under 11,000.

Some 2.4 billion shares were traded on the Tokyo exchange’s first section, just under a one-month high marked last Wednesday.

INTEL CAUTION

On Wall Street, the Dow closed at 11,005.97, its highest close since September 2008. Other U.S. stock indexes also rose on expectations of good earnings, and the CBOE Volatility Index, a popular measure of investor fear, hit its lowest close since July 19, 2007.

Worries that Intel’s earnings might spark selling even if good set off profit-taking of semiconductor-linked shares, market players said.

“Though good earnings are expected, these predictions are factored in, so that anything except a large positive surprise could lead to selling once the results are out,” said Takashi Ushio, head of the investment strategy division at Marusan Securities.

Isuzu rose 3.1 percent to 264 yen, with volume surging to more than twice its 30-day moving average after Nomura Securities raised its rating to “buy” from “neutral,” saying the truck company’s earnings are likely to have beaten the firm’s own estimate for the year ended in March.

Chip gear manufacturer Tokyo Electron lost 1.1 percent to 6,360 yen, chip-tester maker Advantest Corp shed 1.4 percent to 2,430 yen and Shin-Etsu Chemical, which makes semiconductor wafers, edged down 0.9 percent to 5,510 yen.

Sanyo Electric Co ended up 1.3 percent on a report that its operating profit is likely to jump 50 percent this financial year aided by the distribution network of its new parent company, Panasonic Corp.

Its trading volume jumped to more than 6 times its 30-day moving average.

Mitsui O.S.K. Lines fell 2.6 percent to 667 yen and rival Kawasaki Kisen lost 1.6 percent to 372 yen after Mitsubishi UFJ Securities cut its ratings on the shipping firms, saying their shares were overvalued.

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(Reporting by Elaine Lies; Editing by Edwina Gibbs)

Nikkei down 0.8 percent on profit-taking as yen gains