Nikkei likely to slip; eyes on yen, machinery orders

TOKYO (BestGrowthStock) – Japan’s Nikkei average is likely to slip on Monday, hurt by concern over the euro zone’s fiscal woes although a rise in machinery orders, due out just before trade opens, could boost machinery shares and slow selling.

Mizuho Financial Group (8411.T: ), Japan’s second-largest bank by assets, could be in focus after it said it would raise about $8.6 billion in a share offering and forecast a near doubling of profit this year as the economy recovers.

The euro plunged to an 18-month low against the dollar on Friday as investors worried that harsh spending cuts mandated by a bailout plan may choke off a fragile recovery in the 16-country euro zone. Analysts also said a general rise in the yen would weigh on shares as well.

“There’s a lot of nervousness still about the tough fiscal situation in the euro zone, and while Japanese earnings were good there’s a lot of uncertainty about what lies ahead over the next year, especially given the stronger yen,” said Hiroichi Nishi, general manager at the equity division of Nikko Cordial Securities.

U.S. stocks (Read more about the stock market today. ) fell on Friday on a combination of weak earnings from retailers, Senate backing for limits on credit card fees and concerns over the sustainability of European public debt.

In a sign the market is likely to open lower, Nikkei futures traded in Chicago closed at 10,320, down 1.2 percent from the Osaka close.

Market players will be watching to see if the benchmark Nikkei (.N225: ) manages to hold above its 200-day moving average, currently around 10,350, or not. Some said a fall below 10,400 could lead to further falls, but that 10,000 was likely to hold.

The Nikkei’s relative strength index (RSI) was at 40 on Friday. Anything from 30 and below is considered oversold.

The Nikkei is likely to range between 10,200 and 10,400. It closed at 10,462.51 on Friday

Machinery orders for March are set to rise 5.5 percent from a month earlier, according to a Reuters poll, with forecasts ranging from a rise of 1.2 percent to a rise of 9.6 percent.

Wall St slides as retailers, financials weigh (.N: ) > Euro struggles near 18-month lows on weak EU outlook (USD/: ) > Prices climb as investors search for a safe haven.

Gold flat after rally but posts fourth weekly rise (GOL/: ) > U.S. oil ends at 3-month low on euro zone woes

STOCKS TO WATCH

— Sumitomo Mitsui Financial Group

SMFG, Japan’s third-largest bank by assets, on Friday forecast a 25 percent rise in net profit this year as the economy stages a modest recovery.

— Shinsei Bank

The midsize lender, about one-third owned by U.S. buyout firm JC Flowers, posted a massive quarterly loss and canceled merger plans with rival Aozora Bank.

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(Reporting by Elaine Lies)

Nikkei likely to slip; eyes on yen, machinery orders