Nikkei falls 0.9 percent after rally, banks weigh

By Aiko Hayashi and Chikafumi Hodo

TOKYO (BestGrowthStock) – Japan’s Nikkei average fell 0.9 percent on Friday, hurt by broad profit-taking after a rally the day before and as financial stocks tracked their Wall Street peers lower on worries about a widening U.S. foreclosure crisis.

Analysts said that market players were being particularly fickle at the moment — not adverse to taking on risk as they did on Thursday amid expectations that the Federal Reserve will ease and bring more liquidity to markets, but also very quick to unwind positions.

“They know the Fed is considering easing policy because of worries about the U.S. economic outlook, but at the same time, it’s not surprising that those who have put money into global stocks and commodities move to unwind positions at any moment,” said Tsuyoshi Segawa, an equity strategist at Mizuho Securities.

Continued strength in the yen, which hit a new 15-year high on Thursday, put pressure on exporters and sent the Nikkei 0.9 percent lower on the week. The benchmark is now down about 2 percent from a high hit after the Bank of Japan announced bold easing measures last Tuesday.

The benchmark Nikkei (.N225: ) ended down 83.26 points to 9,500.25, while the broader Topix (.TOPX: ) fell 1.3 percent to 826.38.

On Thursday, the Nikkei rose 1.9 percent, its best daily performance in a month, buoyed by a jump in resource stocks as dollar weakness fueled a climb in commodity prices.

Traders said Thursday’s gains were partly due to active buying by one European institution, which bought Nikkei futures possibly on behalf of overseas commodity trading advisers (CTAs) and hedge funds who were doing short-term trades.

Technical indicators showed the Nikkei has strong support at its 25-day moving average, now at 9,458, while its next upward targets are its recent peaks around 9,700, marked this month, and 9,800, hit in July.

NOMURA, BANKS HURT

Nomura Holdings (8604.T: ) lost 6.2 percent to 427 yen after a newspaper reported that Ashikaga Bank, a regional bank affiliated with Nomura, will postpone re-listing on the Tokyo Stock Exchange because of sluggish stock market conditions.

Analysts said that while U.S. foreclosure worries were undermining sentiment on Friday, Japanese banks were unlikely to be directly affected and the impact should be limited.

Mizuho Financial Group (8411.T: ) dropped 4.9 percent to 116 yen and Mitsubishi UFJ Financial Group (8306.T: ) fell 2.8 percent to 385 yen.

Among exporters, Canon Inc (7751.T: ) slipped 1.3 percent to 3,860 yen and Sony Corp (6758.T: ) fell 1 percent to 2,613 yen after gains the previous day.

The dollar stood at 81.20 yen in Asian trade after it dropped to a 15-year low of 80.88 yen on EBS on Thursday despite wariness about Japanese intervention, and looked set to challenge its record low of 79.75 hit in April 1995.

But, all in all, the market was relatively resilient despite the yen’s strength, and analysts said markets seemed to have already priced in quantitative easing by the Fed and the dollar’s broad decline may soon run its course.

“The yen is strong, but it’s not as if the Japanese currency is the only one that’s gained against the dollar,” said Hajime Nakajima, deputy general manager at Cosmo Securities.

“There’s the view in the market that dollar/yen may rebound once the U.S. Federal Reserve announces much expected easing policy, and investors appear to be moving to factor that in.”

About 1.89 billion shares changed hands on the Tokyo exchange’s first section, down from a five-month high of 2.88 billion booked last Wednesday.

Declining stocks outnumbered advancers by more than 5 to 1.

(Editing by Edwina Gibbs)

Nikkei falls 0.9 percent after rally, banks weigh