💎 Fed’s first rate cut since 2020 set to trigger market. Find undervalued gems with Fair ValueSee Undervalued Stocks

Nikkei dips after rally; upward momentum seen intact

Published 11/11/2010, 08:30 PM
Updated 11/11/2010, 08:32 PM

* Eases after 4-1/2-mth closing high; exporters, banks down

* Profit-taking weighs but uptrend to continue - strategist

* Resistance expected near 10,000, then 2010 high eyed

By Aiko Hayashi

TOKYO, Nov 12 (Reuters) - Japan's Nikkei inched down on Friday, taking a breather after ending the previous day at its highest in 4-½ months, but analysts said more gains were in store as the outlook for the global economy brightens.

A clear break above 9,800, a peak hit in July and breached this week, has triggered successive waves of stop-loss and option-related buying. That is paving the way for a climb towards 10,000, though traders say this level will likely serve as resistance.

"Profit-taking emerged as the market has climbed rapidly since last week. But today's weakness is simply a correction and doesn't really signal a change in the overall trend," said Soichiro Monji, chief strategist at Daiwa SB Investments.

"In addition to ample liquidity, uncertainty over the outlook for the global economy is receding, as you can see in recent economic data from the United States, such as jobs numbers."

The benchmark Nikkei slipped 0.3 percent to 9,830.35. It rose 0.3 percent to 9,861.46 on Thursday to book its highest close since June 24, when the Nikkei last traded above 10,000.

Technical trends have turned stronger since the Nikkei decisively broke above 9,800 on Wednesday. After 10,000, analysts see this year's high of 11,408.17, hit in April, as its next target.

Monji said the Nikkei would likely reach that level early next year, also citing solid Japanese corporate earnings.

Global stocks had been boosted by the Federal Reserve's plan to buy $600 billion of Treasuries to lower interest rates and reinvigorate the economy.

The broader Topix fell 0.2 percent to 854.78.

The dollar rose above 82 yen this week for the first time since early October. In early Asia trade it was at 82.36 yen.

Analysts said the market is closely watching the outcome of the G20 summit in South Korea, where discussion was expected to include exchange rate policies and global economic imbalances, though few investors expect a sweeping agreement.

Shares of exporters that had led gains in recent sessions lost steam, with Advantest down 1.9 percent at 1,616 yen and TDK slipping 1.5 percent to 5,160 yen.

Bank shares that had strengthened after the Financial Times reported this week that most major Asian banks could be exempt from planned global regulations also fell.

Mitsubishi UFJ Financial Group fell 1 percent to 395 yen and Sumitomo Mitsui Financial Group declined 1.6 percent to 2,515 yen.

Mizuho Financial Group shed 2.3 percent to 127 yen, after the Nikkei business daily reported that the bank would buy a stake of about 2 percent in BlackRock Inc, the world's largest money manager, for $500 million.

Mizuho and Sumitomo Mitsui are due to report earnings after the market close. (Editing by Chris Gallagher)

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.