Nikkei slips as market holds breath before Bernanke

TOKYO (BestGrowthStock) – Japan’s Nikkei stock average edged down 0.5 percent on Tuesday, with exporters like Sony Corp slipping, as investors held back ahead of congressional testimony by Fed Chairman Ben Bernanke later this week.

Toyota Motor Corp, which has lost some $30 billion in market value since late January, dropped in line with the broader market. It now faces a criminal investigation into its handling of safety problems and investors are keen to see how President Akio Toyoda’s testimony to Congress pans out.

But gains by shipping firms after a brokerage raised its rating for Kawasaki Kisen helped curb losses amid extremely thin trade.

The benchmark’s lower finish follows cautious trade on Wall Street, which saw its lowest daily volumes so far this year, and were looking to Bernanke’s testimony on Wednesday and Thursday for clarity on the Fed’s thinking on interest rates.

Tokyo analysts said investors were cautious after last week’s surprise U.S. discount rate hike, but added that a sense was spreading in the market that further surprises were unlikely for now.

“Personally, I don’t think there will be any quick hike of the fed funds rate. Indicators are showing a real mix, with the U.S. CPI last week lower than expected,” said Noritsugu Hirakawa, a strategist at Okasan Securities.

“What Bernanke will likely do is say that they are gradually normalizing what was an emergency situation.”

The benchmark Nikkei shed 48.37 points to 10,352.10 after moving in an extremely tight range throughout the day, while the broader Topix lost 0.3 percent to 907.37.

Recovering from worries about the Fed’s hike in the discount rate, the Nikkei had climbed 2.7 percent the previous day to its highest finish in three weeks and broke above its 25-day moving average of around 10,300.

The Nikkei’s close above that level means it may well become support, said Takashi Ushio, head of the investment strategy division at Marusan Securities.

TOYOTA TROUBLES

Over the short-term, activity may remain subdued.

“Investors are awaiting important events in the United States such as Bernanke’s testimony and Toyota’s hearings,” said Tsuyoshi Segawa, an equity strategist at Mizuho Securities.

“Without strong trading factors at the moment, profit-taking in blue-chip stocks, which had rallied yesterday, is coming to the fore.”

Toyota is gearing up for two days of congressional hearings on its handling of safety problems. A U.S. congressional panel has also accused it of making apparently misleading statements.

Toyota later said its global output rose 55.8 percent in January from a year earlier.

Toyota’s stock was down 0.5 percent at 3,325 yen.

Shares of Sony slipped 0.3 percent to 3,190 yen and chip gear firm Advantest Corp fell 0.8 percent to 2,217 yen. Honda Motor Co declined 2.2 percent to 3,110 yen.

But Sega Sammy Holdings rose 1.9 percent to 1,198 yen after Credit Suisse raised its rating on the game maker to “neutral” from “underperform” and hiked its target price to 1,160 yen from 900 yen, citing increasing earnings stability from the next business year.

Kawasaki Kisen gained 3.5 percent to 326 yen after Morgan Stanley hiked its rating on the shipping firm to “overweight” from “equalweight,” said Okasan’s Hirakawa.

“There’s also a gradual sense that the environment is getting better for shippers, leading to better earnings,” he added.

The Baltic Exchange’s main sea freight index, which tracks rates to ship dry commodities, inched higher on Monday, with players pinning hopes on stronger Chinese import demand.

Fellow shipper Mitsui O.S.K. Lines rose 1.5 percent to 596 yen, while Nippon Yusen edged up 0.6 percent.

Trading volume was subdued, with 1.7 billion shares changing hands on the Tokyo exchange’s first section, well below the average daily volume last month of roughly 2.6 billion shares, and also below last year’s daily average of 2.3 billion shares.

Declining stocks outnumbered advancing ones, 859 to 653.

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(Additional reporting by Aiko Hayashi; Editing by Edwina Gibbs)

Nikkei slips as market holds breath before Bernanke