July 29, 2013 / 1:45 AM / in 4 years

Nikkei falls below 14,000 as exporters drag on strong yen; Fed, China data eyed

* Exporters take a hit as dollar stays below 98 yen
    * Many macro events, earnings in focus
    * China slowdown a risk to Japanese market - analyst
    * Fanuc shines as weak profit priced in

    By Ayai Tomisawa
    TOKYO, July 29 (Reuters) - Japan's Nikkei share dropped
bellow 14,000 for the first time in almost a month as exporters
were hit by the yen's strength against the dollar, while caution
ahead of Chinese manufacturing data and the U.S. Federal Reserve
policy statement this week sidelined investors.
    The Nikkei dropped 1.7 percent to 13,886.76 in
mid-morning trade after hitting as low as 13,860.16, the lowest
level since July 1.
    Toyota Motor Corp dropped 2.6 percent and was the
most traded stock by turnover, while Honda Motor Co 
shed 2.1 percent and Sony Corp fell 2.2 percent after
the dollar traded at a four-week low of 97.79 on Monday.
A higher yen tends to make export-reliant Japan's products less
competitive in the global market, and lowers the profits when
    The Topix dropped 2.4 percent to 1,139.47.
    Analysts said that investors are reluctant to take positions
before big events at home and abroad this week.
    "A sense of caution is looming in the market, especially
because investors are worried about a slowdown in the Chinese
economy. And when they see a risk in Asia, they tend to buy the
yen, and the Japanese market is hit by that," said Kyoya
Okazawa, head of global equities at BNP Paribas, adding that the
market is bracing for weak manufacturing data in China later
this week.
    A weak China PMI result will only heighten fears of a hard
landing for the world's second largest economy. China is Japan's
second major export market.
    In the United States, investors will scrutinize the Federal
Open Market Committee policy statement this Wednesday for any
additional clues about the Fed's intended timeline for scaling
back its quantitative easing. The market is also focused on jobs
data to be released on Friday.
    "It's hard to take positions until we see the data outcome,"
Okazawa said.
    Fanuc Corp  bucked the broad market weakness and
rose 3.3 percent despite a 36 percent fall in its operating
profit for the April-June quarter as the figure was in line with
market expectation, market participants said.
    "Most foreign investors have this stock in their portfolios
because demand for factory automation will rise in the long-term
while Chinese people's wages increase. The weak result was
already priced in the market," said an analyst.
     KDDI Corp, which is reporting its results on
Tuesday, rose as much as 2.2 percent after the Nikkei newspaper
said the mobile operator was expected to post a record-high
April-June operating profit of around 160 billion yen ($1.6
billion), up 70 percent from a year ago.
    Nomura Securities said that 40 companies in the
Russell/NOMURA Large Cap Index had released their first-quarter
results as of July 26, equivalent to 14 percent of the total.
    Sales at these companies rose 8.4 percent on year, while
recurring profits rose 12.3 percent, Nomura said.
    "Although this is an extremely limited sample size, we note
that FY12 Q4 results for the same universe showed sales growth
of 5.5 percent and recurring profit growth of 2.9 percent. As
such, there has been an upturn in both sales and profit momentum
in FY13 Q1," Nomura wrote in a report.
    On Monday, Komatsu Ltd, Hitachi Construction
Machinery Co and Sumitomo Mitsui Financial Group
 will report their first-quarter results.
    "Unless companies cut their full-year outlooks, there
shouldn't be big negative surprises," said Hisao Matsuura, a
strategist at Nomura.
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