Nikkei seen range-bound as PM-BOJ meeting eyed

TOKYO (BestGrowthStock) – Japan’s Nikkei is likely to move narrowly on Monday as investors wait to see if Bank of Japan Governor Masaaki Shirakawa and Prime Minister Naoto Kan hold a meeting at which markets were expecting Kan to pressure the central bank for action in the face of the yen’s strength.

Jiji news agency said the government is considering postponing the meeting, which had been expected on Monday, to avoid giving the impression that it is intervening in the BOJ’s policy decisions.

Market players said stocks would likely fall if the meeting does not take place on Monday.

“The market will likely be range-bound after U.S. stocks (Read more about the stock market today. ) ended mixed and ahead of the Kan-Shirakawa meeting expected today,” said Hiroichi Nishi, general manager of equity marketing at Nikko Cordial Securities.

“But if there is no meeting today, that’ll be negative for the market, though moves might largely depend on how the currency market reacts.”

Markets have been rife with speculation that the BOJ may try to pre-empt government pressure to further loosen its already easy policy at an emergency meeting before or shortly after Shirakawa’s expected meeting with Kan.

But sources say the BOJ is unlikely to act before its next regular policy meeting on September 6-7 unless the yen heads toward its all-time high past 80 to the dollar at a pace of 2 to 3 yen per day.

Nikkei futures traded in Chicago closed at 9,160, unchanged from the Osaka close.

The benchmark Nikkei (.N225: ) is likely to move between 9,050 and 9,250, market players said. It fell 2 percent on Friday to 9,179.38 and fell 0.8 percent on the week, for its second straight negative week.

The market is watching whether the Nikkei can stay above 9,000, although several attempts this month to break through on the downside to a fresh 13-month low have been checked just under 9,100. The 9,000 to 9,100 area served as support on several occasions last year.

If the Nikkei breaks below 9,000, the next support would lie at 8,697, a 61.8 percent retracement of the rally between its March 2009 low and April 2010 high.

Analysts say that steps to stem the yen’s rise are crucial for the Nikkei. In early Asia trade, the dollar was steady at 85.65 yen, after hitting a 15-year low of 84.72 yen this month.

U.S. stocks (Read more about the stock market today. ) inched down on Friday on persistent concerns the recovery has tapered off.

STOCKS TO WATCH

— TDK Corp (6762.T: )

Electronics parts maker TDK said orders for capacitors, a key component of cell phones, and other passive components have been slowing since July and are likely to slow further in the October-December quarter amid growing concerns about the global economy outlook.

— Panasonic Corp (6752.T: )

Panasonic said on Friday it would raise the output capacity of its plasma display panel plant in China by nearly five times by March 2013 to meet soaring TV demand in the country.

(Reporting by Aiko Hayashi; Editing by Chris Gallagher)

Nikkei seen range-bound as PM-BOJ meeting eyed