Nikkei seen falling for fifth day

TOKYO (BestGrowthStock) – Japan’s Nikkei average is likely to fall for a fifth day on Thursday after Federal Reserve Chairman Ben Bernanke’s remark that the U.S. economy faces “unusually uncertain” prospects added to worries about the recovery and sent Wall Street lower.

Market analysts said a rally in the yen due to concern about the U.S. economy and dampened risk appetite will likely pressure shares of exporters, though some said huge falls are unlikely, with the Nikkei having lost more than 5 percent in the past four days.

“Those who had expected more were disappointed after Bernanke only said the Fed stands ready to ease monetary policy further,” said Hiroichi Nishi, general manager of equity marketing at Nikko Cordial Securities.

The U.S. economy resumed growth about a year ago, but stubbornly high unemployment, a fresh drop in housing activity and a slowdown in manufacturing have raised fears of a “double-dip” recession.

Although Bernanke said the chances of a fresh downturn were not high, stocks retreated as he testified, with major averages (.DJI: ) (.SPX: ) dropping more than 1 percent. Some investors were surprised by the Fed chief’s candid admission of lingering uncertainty. Others were taken aback by the tentative nature of the Fed’s plans for further easing.

“But the market will likely move narrowly after the initial slide because stocks have already fallen for four days in a row and on charts, they have entered a buy zone,” Nishi said.

Nikkei futures traded in Chicago closed at 9,225, down 0.6 percent from the Osaka close.

The benchmark Nikkei (.N225: ) is likely to move between 9,100 and 9,250, market players said. It inched down 0.2 percent the previous day to 9,278.83.

On the technical front, in a sign that recent drops, which saw the Nikkei lose 1.8 percent last week, may be coming to an end, the Nikkei’s MACD has narrowly avoided a bearish cross and appears to be leveling out.

Its slow stochastic — a measure of how oversold the market is and whether it is in a short-term up or down trend — continues to fall, but now is deep within oversold territory.

Market players say support for the Nikkei likely stands firm at 9,200, just under its July 1 close, which was a seven-month closing low. After that, support lies around 9,091, a low hit this month, and 9,076, a low posted in November 2009.

Bernanke’s economy comment batters market (.N: ) > Euro slides vs dollar; yen rallies after Bernanke (USD/: ) > Bonds rally on Bernanke’s “uncertain” outlook (US/: ) > Gold falls after Bernanke comments (GOL/: ) > Oil falls on Bernanke comments, inventory rise (O/R: )


(Reporting by Aiko Hayashi)

Nikkei seen falling for fifth day