Nikkei falls as Greece, bank woes weigh
The Nikkei stock average fell nearly 1% on Monday, as euro zone debt worries weighed on markets before a crucial parliamentary vote due this week and after a sharp fall in overseas banking shares.
June 27, 2011 / 10:53 IST
The Nikkei stock average fell nearly 1% on Monday, as euro zone debt worries weighed on markets before a crucial parliamentary vote due this week and after a sharp fall in overseas banking shares.
Financials dragged the Nikkei below support at its 13-week moving average after a steep fall in shares of two Italian banks on fears about their capital positions reminded investors about contagion risks last Friday.But carmakers limited losses for the Nikkei, with investors citing receding supply chain jitters. "You still have the Greek worries and the rising interest rates in emerging markets seriously souring the mood on the markets," said Mattia Ciancaleoni, director of equity sales at Citigroup."This week is also heavy with lots of macroeconomic data releases, and many players are also afraid to make big bets ahead of the end of the QE2 this week," said Ciancaleoni, referring to the Federal Reserve's USD 600 billion bond buying programme due to expire at the end of June.By the midday break the benchmark Nikkei fell 0.9% to 9,595.18, while the broader Topix index shed 0.9% to 826.14.Banks were also hurt by news that global banking regulators have agreed on a proposal to slap an extra capital charge on the world's biggest banks.Mitsubishi UFJ Financial Group, which has long been seen as in that grouping, dropped 1.1 percent to 372 yen. Sumitomo Mitsui Financial Group fell 1 percent to 2,374 yen on speculation that it may also become subject to the regulations.The domestic banking sector , which is down 13.4% in 2011, shed 1.2% on Monday. Market participants will look closely whether Greece can avoid becoming the first euro zone country to default on its debt as it votes on a package of harsh austerity measures due on Wednesday and Thursday, with members of the public vehemently opposing any austerity measures.Some carmarkers edged up, bolstered after Nissan said last week it would boost sales by 9.9% to 4.6 million vehicles this year, despite disruption to productionfrom the March 11 earthquake. Nissan will announce a midterm business plan announcement on Monday.Honda Motors added 1.3% to 3,040 yen with investors saying they expected it to quickly catch up with Nissan Motors, whose share price has returned to pre-quake levels. Honda's share price is still more than 10% below pre-quake levels while Nissan's is 3% higher.With the Nikkei having moved below its 13-week moving average at 9,596, strong support is next seen between 9,514 and 9,498 where the benchmark's index's 25-day moving average and the base of the Ichimoku cloud lies.The Nikkei still hovers some 8% below its level on March 10, the day before a massive earthquake and tsunami ravaged Japan's northeast coast.In comparison, Asian stocks outside Japan have eked out a 1% gain over the same period. Takashimaya Co bucked the trend and at one point rose to its highest in more than six weeks. By the midday break it had added 1.7% to 539 yen.Japan's third-largest department store operator on Friday raised the operating profit forecast for its first-half to Aug. 29 to 6.5 billion yen from an earlier prediction of a 1.5 billion yen loss, saying business had bounced back. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
