Nikkei set to fall on Goldman; eyes on yen

TOKYO (BestGrowthStock) – Japan’s Nikkei average is set to slide on Monday after Wall Street fell its most in nearly two months on fraud charges against Goldman Sachs and after some U.S. corporate earnings failed to live up to high expectations.

“Certainly shares are going to fall today, following those in the U.S. and Europe, which slid amid concerns they had become overbought,” said Hiroichi Nishi, general manager at the equity division of Nikko Cordial Securities.

“Yet there’s been no change to the fact that the global economy is recovering, and bargain-hunting is likely to emerge at the lows.”

U.S. financial stocks led Wall Street lower, with all major indexes falling more than 1 percent, after the Securities and Exchange Commission charged Goldman Sachs with fraud over its handling of a debt product tied to subprime mortgages.

Investors, worried about a potential crackdown on other companies, sent the KBW banks index (.BKX: ) down 3.6 percent.

But Nishi said that while Japanese financial shares would inevitably take a hit, financial shares in the U.S. had been some of the market’s sharpest recent gainers and the news about Goldman Sachs had been used mainly as an excuse to take profits.

“The yen’s strengthening, along with a fall in commodities prices, is likely to have a much bigger impact on Japanese shares today, with exporters and resource shares particularly weak,” he added.

The dollar slipped below 91 yen, down 0.2 percent in early Asian trade. U.S. copper futures finished at a three-week low on Friday as risk sentiment crumbled.

Toyota Motor Corp (7203.T: ) may draw attention after Japanese media reported that the carmaker was planning to pay a proposed $16.4 million fine from U.S. regulators without admitting wrongdoing as it seeks to repair its reputation after massive recalls.

Separately, Toyota said on Friday it would recall 870,000 Sienna minivans sold in the United States and Canada since the 1998 model year because of a risk that the spare tire could drop into the road.

Market players said the Nikkei was likely to trade between 10,800 to 11,000 and would break below the 25-day moving average, which currently comes in at just over 11,000. It closed at 11,102.18 on Friday.

In a sign that stocks are likely to open lower, Nikkei futures traded in Chicago closed at 10,915, down 1.6 percent.

STOCKS TO WATCH

— Tokyo Steel Manufacturing Co (5423.T: )

Tokyo Steel is set to launch automotive steel sheet operations to make its auto-related business a new moneymaker at a time when auto demand is growing sharply in Asia, the Nikkei business daily said on Sunday, citing company sources.

Japan’s leading electric furnace steelmaker, which focuses on producing steel for construction, will next month export a total 1,500 metric tons of hot rolled steel as samples to five or six Chinese autoparts suppliers, the Nikkei said.

— Hitachi Ltd (6501.T: ), Toshiba Corp (6502.T: )

Hitachi and Toshiba Corp (6502.T: ) have likely beat their own earnings outlook for the year just ended due to brisk demand for digital electronics and power plants in emerging markets, the Nikkei business daily said.

— Nippon Yusen (9101.T: )

Major shipping company Nippon Yusen KK is likely to return to the black with a pretax profit of around 60 billion yen in the financial year to March 2011, compared to an estimated pre-tax loss of 36.0 billion yen for the year that ended last month, the Nikkei business daily said on Saturday.

— JFE Holdings Inc (5411.T: )

JFE Holdings, the world’s sixth-biggest steelmaker, likely posted an 85 percent drop pretax in profit in 2009/10, hurt by a global decline in steel demand, the Nikkei business daily said.

JFE’s pretax profit likely fell to 60 billion yen in the previous financial year that ended last month, the Nikkei said. That would still be better than the company’s previous forecast for a 40 billion yen pretax profit, however.

— Sumitomo Corp (8053.T: )

Bolivian peasants on Friday stepped up their protest against the San Cristobal mine owned by major Japanese trading house Sumitomo Corp, overturning containers full of mineral ore and saying they would keep blocking a key railway line until their demands are met.

Money

(Reporting by Elaine Lies; Editing by Edwina Gibbs)

Nikkei set to fall on Goldman; eyes on yen