Nikkei seen lower in wary trade as Fed, Obama eyed

TOKYO (BestGrowthStock) – Japan’s Nikkei average is expected to fall on Wednesday after investors’ caution ahead of the Federal Reserve’s policy announcement and President Barack Obama’s State of the Union address sent Wall Street lower.

In addition to those U.S. events, investors in Japan will closely watch a series of earnings at home. Japan’s reporting season is heating up this week, with big-name companies including Canon Inc (7751.T: ) due to report later on Wednesday.

Market analysts expect little immediate impact from Standard and Poor’s warning 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.

“Both the Japanese and U.S. markets have obviously entered an adjustment phase, and the Nikkei’s next target will likely be its 75-day moving average of around 10,134,” said Kenichi Hirano, operating officer at Tachibana Securities.

“The market’s floor will likely be determined by whether fear about China’s tightening policy would be wiped away and if U.S. financial restrictions were strengthened further.”

Nikkei futures in Chicago closed at 10,370, almost unchanged from the Osaka close.

The benchmark Nikkei (.N225: ) is likely to move between 10,200 and 10,450 on Wednesday, market players said.

It fell 1.8 percent on Tuesday to 10,325.28, its lowest finish in five weeks, hurt as the yen rose broadly after China implemented a previously ordered increase in reserve requirements for some banks.

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

On Tuesday the Standard & Poor’s 500 Index (.SPX: ) fell 0.4 percent.

The Fed’s 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.

STOCKS TO WATCH

— Toyota Motor Corp (7203.T: )

Toyota said it will suspend sales of eight models involved in a recall announced last week for potentially faulty accelerator pedals.

— Seven & I Holdings (3382.T: )

Japan’s largest retailer has decided to close one of its department stores in Tokyo, a source said, as it steps up efforts to revamp the upscale chain hit by weak consumer spending.

The store, located in central Tokyo, had about 16.2 billion yen ($180.8 million) in sales for the year ended in February last year. The company runs 28 department stores in addition to supermarkets and Seven-Eleven convenience stores.

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($1=89.61 Yen)

(Reporting by Aiko Hayashi; Editing by Michael Watson)

Nikkei seen lower in wary trade as Fed, Obama eyed