Japan’s Nikkei average hit a 10-week low on Monday, dented by shares of exporters on concerns over the fragility of the US economic recovery and lingering worries about the yen’s recent strength. But a surge in shares of Fast Retailing, which saw domestic same-store sales at its Uniqlo casual-clothing chain jump 32 per cent in September, provided support to the benchmark index, which earlier moved in and out of negative territory.
“With eyes increasingly on corporate earnings reports for the first half of Japan’s business year, investors are betting the stronger yen will no doubt drag on exporters’ outlooks,” said Masayoshi Okamoto, head of dealing at Jujiya Securities.
In see-saw trade, the Nikkei dipped 0.4 per cent to 9,692.24, after falling as far as 9,671.39, its lowest since July 22.
The broader Topix slipped 0.9 per cent to 866.41. Weaker-than-expected US jobs data weighed on investor confidence, although analysts said the numbers had not drastically altered expectations that the US economy would recover gradually.
“While the data was bad and optimism about the US economy may have receded, I do not think market players think that this means that the outlook for the US economy is ruined,” said Hideyuki Ishiguro, supervisor at Okasan Securities’ investment strategy department.
“I think it just means market sentiment has returned to neutral for the time being,” Ishiguro added.
The Nikkei fell 5.2 per cent last week, its worst weekly loss in about three months. It has fallen below trendline support drawn from its March trough near 7,021 and through its July low near 9,050, and on Friday the benchmark index dropped below the bottom of the cloud on daily Ichimoku charts.
Some analysts say the next downside target may be 9,500, with a break below that opening the way for a drop towards its July low of 9,050.
Banking shares rose after having recently been battered by worries that lenders may come out with share offerings in the face of a global regulatory push for banks to carry bigger capital buffers.
Top bank Mitsubishi UFJ Financial Group climbed 1.8 per cent to 453 yen and Mizuho Financial Group added 2.3 per cent to 178 yen. The banking sector subindex rose 0.5 per cent.
Nomura Holdings shot up 5.6 per cent to 564 yen. Shares of Japan’s largest brokerage plunged after it last month unveiled a $5.6 billion share sale plan aimed partly at meeting tougher capital requirements.
“Short-covering after a sell-off is buoying financial shares,” said Mitsuo Shimizu, deputy general manager at Cosmo Securities.
“Investors are also betting Nomura’s share sales price will be decided soon, possibly today. Usually, selling on worries about the erosion of demand and supply tends to run its course once such prices are set.”
Fast Retailing soared 16.4 per cent 13,710 yen. The big jump in sales was helped by the onset of cold weather which boosted demand for autumn goods and by a five-day weekend in September.