Nikkei set to slide but policy hopes seen supporting

TOKYO (BestGrowthStock) – Japan’s Nikkei average is likely to slide on Friday after a batch of weak U.S. economic data spurred new worries of a deepening slowdown and sent the dollar to near a 15-year low against the yen.

Nikkei futures traded in Chicago closed at 9,225, down 1.4 percent from the Osaka close. In early Asia trade, the dollar was steady at 85.35 yen, after falling to 84.89 on electronic trading platform EBS, within striking distance of a 15-year low of 84.72 set last week.

But in Tokyo, hopes that Japan may ease monetary policy further soon will likely limit falls in stocks, market players said.

Markets are rife with speculation that the Bank of Japan, in an attempt to pre-empt government pressure for action, may loosen its already-easy monetary policy at an emergency meeting before or shortly after a meeting expected on Monday between Governor Masaaki Shirakawa and Prime Minister Naoto Kan.

“The Nikkei is likely to erase the gains it made yesterday, when extreme risk worries somewhat receded, after U.S. stocks (Read more about the stock market today. ) dropped on economic indicators that showed signs of worsening,” said Kazuhiro Takahashi, general manager at Daiwa Securities Capital Markets.

“But hopes that some sort of policy measures might come out at least by Monday have emerged since yesterday, and that will likely support the market.”

The benchmark Nikkei is likely to move between 9,100 and 9,400, market players said, with eyes on currency moves during the day. It rose 1.3 percent the previous day to 9,362.68.

Whether the Nikkei can stay above 9,000 is a big focus this week, market players said, though downside tries have been checked just under 9,100 several times over the past week. The same level became support on several occasions last year.

Below that point, the Nikkei’s next support lies at 8,697, a 61.8 percent retracement of the rally between its March 2009 low and April 2010 high.

But resistance is likely around 9,450, the level of the Nikkei’s 25-day moving average.

The Standard & Poor’s 500 Index fell 1.7 percent to its lowest close in nearly a month after the latest series of data amplified concerns the economy is stuck in neutral.

New U.S. claims for first-time jobless benefits scaled a nine-month high last week, while the Federal Reserve Bank of Philadelphia reported an unexpected contraction in manufacturing in the Mid-Atlantic region.


— Sharp Corp

Sharp will reduce LCD panel production for up to two months starting in August, as television inventories pile up in the United States and China, which will also affect supplies to firms including Sony Corp, the Nikkei business daily reported.

— Hitachi Ltd

Hitachi and 13 other Japanese firms will jointly develop manufacturing expertise in microelectromechanical systems (MEMS) to remain competitive with their U.S. and European rivals, the Nikkei business daily said.

The 14 participants include Omron Corp, Panasonic Electric Works Co Mitsubishi Electric Corp, Dai Nippon Printing Co and Ulvac Inc, the paper said.

(Reporting by Aiko Hayashi; Editing by Joseph Radford)

Nikkei set to slide but policy hopes seen supporting