Nikkei edges lower, but shrugs off Spain | business | Hindustan Times
Today in New Delhi, India
Mar 27, 2017-Monday
-°C
New Delhi
  • Humidity
    -
  • Wind
    -

Nikkei edges lower, but shrugs off Spain

business Updated: May 31, 2010 09:17 IST

Japan's Nikkei average slipped 0.2 per cent on Monday, as trading firms lost ground after commodities prices fell following a downgrade in Spain's credit rating that reinforced worries about euro zone debt issues.

But a number of exporters including Canon Inc edged higher as the yen fell back against the dollar and the euro, with market players saying investors were bargain hunting on any dips in stock prices.

Fitch cut Spain's credit rating by one notch on Friday, saying the country's economic recovery will be more muted than the government forecast due to its austerity measures. The downgrade helped send Wall Street lower ahead of a three-day weekend.

Market players said however the impact of the rating cut on the broader market was limited for now, noting that many analysts had expected the move and only the timing was a surprise.

"While Fitch did cut Spain's rating, S&P did the same thing in April, so it's not as if the move was all that new," said Takashi Ushio, head of the investment strategy division at Marusan Securities.

"There's the sense that the Nikkei may be about to start a bit of a rebound. It's held up quite well even though Wall Street fell. But gains will definitely be capped around 10,000 for now."

The benchmark Nikkei shed 20.27 points to 9,742.71 while the broader Topix was flat at 828.14.

The Nikkei has lost 12 per cent during May as of the end of trade on Friday, putting it on track for its worst one-month performance in well over a year.

But technical indicators are starting to point tentatively towards a possible rebound, with the Nikkei's relative strength index (RSI) climbing above 30 late last week. Anything under 30 is considered oversold.

The Nikkei's MACD has also stopped falling and appears to be inching upwards.

"The Fitch ratings cut on Spain shows that the European issues have not yet been cleared up at all, and this prompted selling of overseas stocks," said Hiroichi Nishi, general manager at the equity division of Nikko Cordial Securities.

"Yet while there's a trend towards a stronger yen, it isn't pronounced, and it's possible that Wall Street's falls may have been exaggerated by investor desire to take profits ahead of a three-day weekend. All of this may limit falls."

The euro rose 0.6 per cent against the yen to 112.56 yen while the dollar rose 0.3 per cent against the yen at 91.38 yen

Canon rose 1.1 per cent to 3,780 yen and TDK Corp crawled up 0.4 per cent to 5,360 yen.

Honda Motor Co was slightly firmer at 2,783 yen. It said it expected production at a China parts plant, the centre of a labour dispute, to resume on Monday.

Trading houses slid after metals prices fell on Friday in the wake of the Spain ratings cut.

Mitsubishi Corp shed 1.5 per cent to 2,042 yen and Mitsui & Co lost 2 per cent to 1,295 yen. Itochu Corp fell 1.7 per cent to 745 yen.