Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Nikkei falls nearly 3 pct, resource shares hit

Published 06/23/2009, 02:47 AM
Updated 06/23/2009, 02:56 AM
HMC
-
ATE
-
TM
-
CAJPY
-

* Nikkei below 25-day moving average, bear signal near

* Resource shares battered as oil below $67, copper falls

* Seven & I Holdings down on competition watchdog rebuke

By Elaine Lies

TOKYO, June 23 (Reuters) - Japan's Nikkei average fell 2.8 percent on Tuesday after investors rattled by falls in overseas markets and worry about the global economy moved to unload riskier assets.

Mitsubishi Corp and other resource-linked shares took a battering as oil fell below $67 and copper extended losses on fears about slowing demand, while exporters fell as the yen advanced against the dollar.

Seven & I Holdings was down but off lows after Japan's Fair Trade Commission ordered its convenience store unit Seven-Eleven Japan to stop pressuring franchise outlets not to cut the price of food items nearing expiry dates.

Though markets appeared spooked by a World Bank report that said prospects for the global economy remain "unusually uncertain" and cut 2009 growth forecasts for most economies, some analysts said the grim outlook had been echoed elsewhere and was being used as an excuse for profit-taking.

"Falling simply on the World Bank report seems strange to me, it's like being surprised by old news all over again," Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities.

"People used this as an excuse to take profits."

The benchmark Nikkei lost 276.66 points to 9,549.61, at one point falling as low as 9,511.45, its lowest since early June and down over 3 percent.

Trade was moderate, with 2.5 billion shares changing hands on the Tokyo exchange's first section, roughly equal to last week's daily average.

The broader Topix lost 2.3 percent to 901.69.

"I don't think there's as much fund movement based on the end of the quarter or the first half-year as some people say, I think what we're seeing is just investors withdrawing money that poured into the markets on excessive optimism during the recent rally," said Takashi Ushio, head of the investment strategy division at Marusan Securities.

In addition, clouds are gathering on the charts.

The Nikkei has dipped beneath its 25-day moving average -- the Japanese proxy for a month, based on its previous six-day trading week. The 25-day moving average has provided support over the course of the Nikkei's rally since early March.

DEATH CROSS NEAR?

In addition, the Nikkei's 25-day moving average is nearing its five-day moving average and could soon cross above it, a move known as the "Death Cross" that is often a bearish signal. But Yamagishi said a similar pattern appeared in late April, where an apparently imminent Death Cross was avoided at the last moment and instead signalled the bottom of a brief dip. "I actually think the market will probably consolidate with the downside holding around 9,500, and we could see Wall Street rebound today," he said.

Mitsubishi and other trading houses fell after crude oil tumbled below $67 a barrel in the wake of a 4 percent fall on Monday on worries about the global economic recovery.

Copper extended losses on worry that buying by China, the world's biggest consumer of base metals, may dry up after months of record imports.

Mitsubishi lost 5.3 percent to 1,714 yen, Mitsui & Co lost 4.6 percent to 1,111 yen and Itochu Corp lost 3.6 percent to 638 yen.

Oil and gas field developer Inpex Corp fell 4.4 percent to 716,000 yen.

Exporters lost ground as the dollar fell 0.8 percent against the yen to trade at around 95.04 yen.

Toyota Motor Corp lost 2.5 percent to 3,590 yen, Canon Inc slid 2.8 percent to 3,120 yen, and Honda Motor Co fell 1.2 percent to 2,555 yen.

Chipmakers slid, with chip-testing equipment maker Advantest Corp down 5.6 percent to 1,623 yen and TDK Corp losing 4.9 percent to 4,230 yen. Tokyo Electron fell 2.2 percent to 4,390 yen.

Declining shares outnumbered advancing ones by more than 7 to 1. (Editing by Michael Watson)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.