Nikkei seen hitting fresh 7-week lows on yen

TOKYO (BestGrowthStock) – Japan’s Nikkei on Monday is likely to extend falls from a seven-week low hit last week, hurt by the yen’s hovering near a record high against the dollar, but trade may be kept in check due to investor caution before a series of key events.

In a highly anticipated policy-setting meeting on November 2-3, the U.S. Federal Reserve is expected to decide on more monetary easing. The Bank of Japan has also pushed forward its next meeting from mid-November to November 4-5, in a move markets see as a precaution in case the BOJ needed to respond to Fed action.

Sony Corp (6758.T: ) will be in focus after the company beat market expectations with its quarterly profit on improved PC and game businesses, and raised its full-year outlook despite tough price competition and the negative impact of the strong yen.

Japan’s earnings season remains in full swing, with major companies such as Hitachi Ltd (6501.T: ), Elpida Memory Inc (6665.T: ), Nissan Motor Co (7201.T: ) and Toyota Motor Corp (7203.T: ) set to report results this week.

“After the market starts lower due to the strength in the yen, it will then likely be range-bound as investors want to see the outcome of the policy-setting meetings both in the United States and Japan,” said Hiroichi Nishi, general manager of equity marketing at Nikko Cordial Securities.

“The corporate earnings season will also continue to be in focus, while eyes remain on the yen.”

Nikkei futures traded in Chicago closed at 9,185, almost unchanged from the Osaka close.

The benchmark Nikkei (.N225: ) is likely to move between 9,050 and 9,250, market players said. It fell 1.8 percent on Friday to 9,202.45, its lowest close since September 9.

Analysts look for the U.S. central bank to announce a new round of bond purchases of about $100 billion a month when its meeting concludes on Wednesday. Quantitative easing is viewed as negative for the dollar as it increases the supply of dollars, diminishing its value.

In early Asia trade, the dollar traded at 80.36 yen, near a postwar historic low of 79.75 yen marked in April 1995.

On Friday, technical sentiment toward the Nikkei faltered as it dropped below closely watched support of 9,300 for the first time since September 15, a day when share prices rose sharply after Japanese authorities intervened in the currency market for the first time in six years.

Around 9,300 is where a narrow band of both the upper and lower level of the Nikkei’s daily Ichimoku cloud comes in.

Analysts have said the Nikkei could next test 9,000, which was last broken on September 8, and then around 8,800, the index’s low for the year.

Hurt by worries about the strength of the yen and its impact on corporate earnings, the Nikkei shed 1.8 percent in October, its biggest monthly fall since August. It fell 2.4 percent on the week, also its worst weekly fall in two months

STOCKS TO WATCH

— Marubeni Corp (8002.T: )

Marubeni will acquire a Chilean waterworks firm as part of a roughly 40 billion yen ($498 million) deal in the largest-ever Japanese acquisition of overseas water operations, the Nikkei business daily reported.

— Panasonic Corp (6752.T: )

Panasonic posted a 74 percent rise in quarterly profit, boosted by strong sales of home appliances in Japan, but kept its full-year forecast unchanged in the face of uncertain second-half demand and the rising yen.

— Honda Motor Co (7267.T: )

Honda said on Friday its quarterly profit more than doubled as sales in Asia soared, and it lifted its annual forecasts for a second time as it absorbs currency losses with deep cost cuts.

— Nomura Holdings Inc (8604.T: ), Daiwa Securities Group (8601.T: )

Nomura, Japan’s biggest brokerage, said its quarterly net profit dropped 96 percent as it struggled to make money from trading and underwriting fees amid a persistent stock market slump.

Daiwa Securities, Japan’s No.2 brokerage, posted a third straight quarterly net loss on Friday as the share market slump trimmed trading and underwriting fees.

— Asahi Breweries (2502.T: )

Asahi Breweries said on Friday it will sell its 58 percent stake in South Korea’s Haitai Beverage for a nominal sum to LG Household & Health Care (051900.KS: ), which will take on the loss-making firm’s debt.

— NEC Capital Solutions (8793.T: )

Japanese financial services provider NEC Capital Solutions said on Friday it aims to raise its holding in real estate investing firm Risa Partners (8924.T: ) to 100 percent in a deal worth 15.8 billion yen.

(Reporting by Aiko Hayashi; Editing by Chris Gallagher)

Nikkei seen hitting fresh 7-week lows on yen