Japan's Nikkei falls to 1-week low on U.S. fiscal concerns

Wed Nov 7, 2012 8:02pm EST

* Nikkei sheds 1 pct, Topix falls 0.9 pct
    * Exporters suffer on concerns U.S. 'fiscal cliff' to
trigger recession
    * Isuzu Motors advances after lifting earnings guidance

    By Dominic Lau
    TOKYO, Nov 8 (Reuters) - Japan's Nikkei average fell to a
one-week low on Thursday, weighed by downbeat investor sentiment
on concerns that U.S. fiscal woes confronting President Barack
Obama after his re-election could trigger a new recession.
    Exporters, which are highly dependent on the health of the
global economy, headed lower, with Canon Inc, Honda
Motor Co and TDK Corp down between 1.5 and 2.2
percent.
    The sector was also hurt by a firmer yen as investors
worried that the U.S. 'fiscal cliff', a mix of tax increases and
spending cuts due to extract some $600 billion from the U.S.
economy in the new year, could push the United States and
possibly the global economy back into recession.
    Risk aversion saw the yen trade at 79.905 to the
dollar on Thursday, up from Wednesday's low of 80.41 yen.       
    The Nikkei dropped 1 percent to 8,884.60, breaking
below its 75-day moving average at 8,888.22 but supported by its
25-day moving average at 8,868.42.
    "It's probably a knee-jerk reaction ... unwind of the
potential (Republican challenger Mitt) Romney premium that was
built into the market," a senior trader at a foreign bank said,
adding that the U.S. 'fiscal cliff' was not a new issue.
    "I will be very surprised if we see a whole bunch of people
turning up to aggressively sell the market, which we do not see
in our flows."
    The trader said his flows were about 1.2 sell order for
every one buy order.
    Overnight, the Dow Jones industrial average lost more
than 300 points in a selloff that drove all major U.S. stock
indexes down more than 2 percent in the wake of the presidential
election as investors eyed the U.S. fiscal debate and the
European Commission's forecast that the euro zone economy would
barely grow next year.
    The broader Topix index lost 0.9 percent to 739.16.
    Other noticeable losers included telecommunication equipment
maker Oki Electric Industry Co Ltd and watch maker
Citizen Holdings, down 5.9 and 6.6 percent
respectively, after they cut their full-year earnings forecasts.
    But Isuzu Motors climbed 4.9 percent to a near
six-month high after the automaker lifted its annual operating
profit estimate.
    As of Tuesday, 59 percent of the 119 Nikkei companies that
have reported quarterly earnings so far undershot market
expectations, according to Thomson Reuters StarMine. That
compared with 54 percent in the previous quarter.   
    The benchmark Nikkei is up 5 percent this year, trailing a
10.9 percent rise in the U.S. S&P 500 and a 10.8 percent
gain in the pan-European STOXX Europe 600 index.
    Still, Japanese equities are slightly more expensive than
their European counterparts, with a 12-month forward
price-to-earning ratio of 11.3 versus STOXX Europe 600's 11,
data from Thomson Reuters Datastream showed. The S&P 500 carries
a 12-month forward P/E of 12.6.
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Comments (1)
mick68 wrote:
Anyone left in this market fully deserves the beating they’re going to take over the next 3-6 weeks.

Nov 07, 2012 8:37pm EST  --  Report as abuse
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