Nikkei hits five-week closing low

By Elaine Lies

TOKYO (BestGrowthStock) – Japan’s Nikkei stock average fell 0.7 percent to a five-week closing low on Wednesday, with Toyota Motor Corp sliding after it suspended sales of eight cars involved in a recall, while other exporters were hurt by a stronger yen.

Investor sentiment was cautious, with the market awaiting a Federal Reserve policy announcement, President Barack Obama’s State of the Union address and also closely watching China’s steps to rein in credit.

“There’s a lot of things going on in China and the United States, and this is pushing investors into taking a wait-and-see stance, especially with major earnings coming up for Japan,” said Noritsugu Hirakawa, a strategist at Okasan Securities.

“Expectations for the earnings are high, but much of this is factored in. So anything less than a positive surprise may not contribute to buying.”

After the close, electronics powerhouse Canon Inc forecast its first annual profit growth in three years, beating analysts’ estimates.

The benchmark Nikkei fell 73.20 points to 10,252.08, its lowest close since Dec 21. It fell 1.8 percent the previous day, hurt as the yen rose broadly after China implemented a previously ordered increase in reserve requirements for some banks.

Market players said support is likely around 10,200, currently where its 50-day moving average comes in.

The broader Topix added 0.1 percent to 917.59.

WAIT AND SEE

Shares of Toyota lost 4.3 percent to 3,705 yen. Analysts said that the suspension of sales could throw the timing of its earnings recovery into doubt, and the news was weighing on the overall market.

“I think that for stocks, the impact of Toyota’s announcement is similar to the situation for Japanese government bonds after the S&P warning yesterday — it has a rather similar overall impact,” said Masayoshi Okamoto, head of dealing at Jujiya Securities.

Standard and Poor’s warned on Tuesday that it may cut Japan’s credit rating unless it produces a credible plan to rein in its soaring debt and lift growth in an economy plagued by persistent deflation, but this was not seen having an immediate impact on stocks.

The dollar fell 0.4 percent against the yen, slipping to 89.24 yen. Investors fret about a stronger yen as it curbs exporters’ profits when they are repatriated.

Canon shed 2.8 percent to 3,615 yen and Sony Corp fell 2 percent to 2,940 yen. Tokyo Electron Ltd slipped 2.5 percent to 5,460 yen.

But Kao rose 5 percent to 2,255 yen after Goldman Sachs raised its target price on the company from to 2,000 from 1,900 yen, citing a 6.9 percent year-on-year rise in Q3 operating profit.

The Federal Open Market Committee began a two-day meeting on Tuesday that is expected to yield few policy shifts, with a Fed statement on the economy and interest rates expected on Wednesday.

Obama makes his State of the Union speech on Wednesday. U.S. stocks (Read more about the stock market today. ) fell 5 percent in a three-day span last week after his administration proposed new restrictions on large banks.

About 1.9 billion worth of shares traded on the Tokyo exchange’s first section, compared with seven-month highs above 3 billion shares logged earlier this month.

Declining shares outnumbered advancing ones by nearly 4 to 1.

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(Reporting by Elaine Lies; Editing by Edwina Gibbs)

Nikkei hits five-week closing low