Nikkei to move narrowly as yen and GDP eyed

TOKYO (BestGrowthStock) – Japan’s Nikkei average is expected to move narrowly on Monday, with investors eyeing movements in the currency market, but falls are likely to be limited with charts showing the benchmark close to being oversold.

Direction may come from Japanese second-quarter gross domestic product data due out just before the open. Median market forecasts are for growth of 0.6 percent for the quarter year-on-year and 2.3 percent annualized growth.

Market players said if the figures were better than expected it would likely boost both the yen and the Nikkei, while worse-than-expected numbers would push both the yen and the Nikkei lower.

“But given that the market fell last week to within sight of 9,000 and that level held, support will solidify around that point and losses, if any, will be limited,” said Hiroichi Nishi, general manager at the equity division of Nikko Cordial Securities.

The Nikkei fell as low as 9,065 last Thursday, a 13-month low, after the dollar hit its weakest in 15 years on worries about a slowdown in the global economy.

U.S. shares edged down on Friday after data showed a smaller-than-expected rebound in July retail sales and consumer inflation at its lowest level since the 1960s, adding to recent evidence that the U.S. economy has slowed considerably. But the figures were able to dispel, for now, fears of a renewed downturn.

In a sign the Nikkei may start off lower, Nikkei futures traded in Chicago closed at 9,205, down 0.7 percent from the Osaka close.

Market players said the benchmark is likely to move between 9,100 and 9,300 on Monday. It closed at 9,253.46 on Friday.

Charts show the Nikkei is close to oversold on a number of fronts, with the benchmark clinging just above its lower Bollinger Band after falling below it on Thursday, suggesting it may be due for a rebound.

Its slow stochastic, a measure of how oversold the market is as well as whether it is in a short-term up or down trend, edged into oversold territory, while its relative strength index (RSI) hovered at 40. Anything from 30 and below is oversold.

STOCKS TO WATCH

— Gree Inc

Gree said on Friday it has overtaken Mixi Inc to become Japan’s biggest social networking site, having seen a near tripling in subscribers in the past two years as users flocked to its mobile games.

Gree had 21.13 million users by the end of July compared with 21 million for Mixi.

— Inpex, other oil-linked shares

Oil and gas field developer Inpex and other oil-linked shares may fall after crude oil prices fell for a fourth straight day on Friday, dropping 6.6 percent for the week, on mounting concerns about slowing economic growth that have weighed on equities and oil prices.

(Reporting by Elaine Lies; Editing by Michael Watson)

Nikkei to move narrowly as yen and GDP eyed