Nikkei retreats from 5-week high on China data, Ukraine worries

Sun Mar 9, 2014 10:15pm EDT

* Nikkei falls 1.1 pct, Topix down 1 pct
    * Investors take profits in Nikkei ahead of 75-day average
    * Strong U.S. payrolls data provides limited support
    * Lack of Japan structural reforms frustrates investors

    By Tomo Uetake
    TOKYO, March 10 (Reuters) - Japanese shares slipped from a
five-week high on Monday morning as disappointing Chinese trade
data and uncertainty over the crisis in Ukraine prompted
investors to lock in recent gains.
    Although the U.S. jobs data released on Friday was
surprisingly strong, it provided limited support because it also
cemented expectations of a further reduction in U.S. monetary
stimulus.
    "Investors are taking profits. There's no clear direction in
the market given concerns over Ukraine and the prospect of a
rise in U.S. interest rates," said Yasuo Sakuma, a portfolio
manager at Bayview Asset Management. "There is no strong
catalyst for buying."
    The benchmark Nikkei was down 1.1 percent at 15,100.18
points, falling from a five-week peak hit on Friday.
    Data released on Saturday showed Chinese exports
unexpectedly tumbled in February, swinging the trade balance
into deficit and adding to fears of a slowdown in China, one of
Japan's biggest export markets. 
    Tensions over Ukraine also kept investors on edge, as
Russian forces tightened their grip on Crimea by seizing another
border post and a military airfield. 
    In addition, lack of progress in structural reforms in Japan
has been frustrating investors.
    "What we want is the third arrow, structural reforms," said
Robert Taylor, partner and portfolio manager at Harris
Associates in Chicago.
    "If (Prime Minister Shinzo Abe) doesn't act quickly, he is
going to waste what has been an exceptional opportunity to make
a significant change. I feel like every day that goes by, the
window is closing for him to move towards structural reforms."
    The Nikkei stalled just below the 75-day average, which
comes around 15,280, a break of which bulls had hoped could
brighten investor sentiment.
    "If the Nikkei closed above its 75-day average today, that
would mean the Nikkei is above all the major averages Japanese
investors are looking at, including the 25-, 100- and 200-day
averages," said Kenichi Hirano, a strategist at Tachibana
Securities.
    "That should be taken as a proof of market recovery and
improve investor sentiment. Trade volume may come back and a
rise in the Nikkei above 16,000 will come within sight."
    
    NONFARM PAYROLLS
    The market drew limited support from the
stronger-than-expected U.S. nonfarm payrolls report, which
showed employers had added 175,000 jobs last month, up from
129,000 new positions in January. 
    Weakness in raw materials-related shares led the decline
after falls in prices of steel and iron ore in recent weeks.
    Oil and coal products and nonferrous metals 
 were the worst-performing sectors on the main board,
losing 1.6 percent and 1.5 percent, respectively.
    But Sony Corp climbed as much as 2.1 percent after
the consumer electronics maker said on Friday that it would book
about a 10 billion yen ($97 million) profit in the next fiscal
quarter on the sale of Tokyo property, as it disposes of assets
under a turnaround effort. 
    The stock was the fourth-most traded on the Topix.  
    The Bank of Japan kicked off a two-day policy meeting on
Monday. Although the central bank is widely expected to leave
monetary policy unchanged, investors are awaiting what Governor
Haruhiko Kuroda will say in his post-meeting briefing on
Tuesday.
    The broader Topix index was down 1 percent at
1,224.37, with trading volume at 28.8 percent of its full daily
average for the past 90 trading days.
    The JPX-Nikkei Index 400, a recently introduced
gauge comprising firms with high return on equity and strong
corporate governance, was down 1.1 percent at 11,074.23.
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.