Profit-taking, stronger yen push Nikkei lower

By Elaine Lies

TOKYO (BestGrowthStock) – Japan’s Nikkei average dipped 0.4 percent on Tuesday as profit-taking emerged after successive days of 18-month highs, with exporters such as Canon Inc (7751.T: ) losing ground on a slightly stronger yen.

Analysts said the decline would be limited on growing prospects of a sustainable global economic recovery, helped by Friday’s strong U.S. jobs report and reinforced by Monday releases showing services grew above expectations in March and pending homes sales rose more than expected in February.

“There have been a lot of reports that companies will revise their earnings forecasts upwards, and these sorts of expectations will limit any dips in stocks,” said Hideyuki Ishiguro, a strategist at Okasan Securities, who added that the next target for investors would be 11,500.

“We still don’t have enough proof of recovery to get the Nikkei back up to where it was before the Lehman shock, around 12,000. That 11,500 level is about as far as it can rise on these kinds of expectations alone,” Ishiguro said.

The benchmark Nikkei (.N225: ) edged down 46.47 points to 11,292.83 after finishing at 11,339.30 on Monday, the third straight day it has hit an 18-month closing high.

The broader Topix (.TOPX: ) lost 0.4 percent to 991.52.

Though the Nikkei’s relative strength index (RSI) has risen over 70, into what is considered overbought territory, longer-term indicators such as MACD suggest the rising trend remains unchanged.

“Given that overheating has been a concern for several weeks now, and that the yen is a little bit stronger, people are using any excuse to lock in profits,” said Masayoshi Okamoto, head of dealing at Jujiya Securities.

The dollar slipped 0.2 percent against the yen to 94.17 yen a day after hitting a seven-month high against the Japanese currency, which market players said was making the Nikkei more vulnerable to profit-taking.

Canon slipped 1.1 percent to 4,460 yen, also hit after J.P.Morgan lowered its rating on the stock to “neutral” from “overweight”, saying the shares had reached J.P.Morgan’s price target of 4,500 yen.

Sony Corp (6758.T: ) lost 1.3 percent to 3,560 yen and Panasonic (6752.T: ) fell 1.9 percent to 1,450 yen.

Fast Retailing (9983.T: ) fell 1.6 percent to 14,680 yen, extending losses a day after tumbling more than 10 percent after its Uniqlo budget fashion chain posted its biggest sales drop in seven years in March as cold weather hurt sales of spring clothing.

Nissan Motor Co (7201.T: ) pared earlier gains to end the morning up 0.6 percent after sources told Reuters that French parent company Renault SA (RENA.PA: ), Nissan, and Germany’s Daimler AG (DAIGn.DE: ) are likely to announce partnership and cross-shareholding plans as early as Wednesday.

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(Reporting by Elaine Lies; Editing by Edwina Gibbs)

Profit-taking, stronger yen push Nikkei lower