Friday, August 5, 2011

Nikkei set to tumble as concern over global economy dominates

TOKYO: The Nikkei benchmark is set to tumble on Friday, hit by sharp falls in the U.S. market as worries over the global economy appear likely to dominate the mood, offsetting the impact of Japan's currency intervention and monetary easing the previous day.

The Dow and the S&P tumbled more than 4 percent on Thursday and the Nasdaq lost 5 percent on fears that the United States is staring at another recession and that Europe's sovereign debt crisis is swallowing two of its largest economies.

Before the market opened, foreign securities houses placed net sell orders for 14.0 million Japanese shares, traders said.

"A heavy sell-off is expected today. Negative factors are coming from overseas markets, so there's nothing Japan can do to avoid the repercussions," said Kenichi Hirano, a strategist at Tachibana Securities.

He saw immediate support at 9,300, where the index hovered for some time after a slide that followed the March quake.

Analysts also said futures-led selling may drag down the market, while retail investors may pick up some defensive stocks on dips.

"But such dip-buying may not have an impact on the overall market as foreigners are likely to be the main sellers," Hirano said.

The market's recent malaise stems from a number of factors. U.S. economic data has worsened, suggesting slowing growth from an already sluggish pace in the first half. Europe's sovereign debt crisis has defied remedies and threatens to engulf the large euro-zone economies of Spain and Italy.

Nikkei futures in Chicago ended at 9,280, down 390 points from their Osaka close of 9,670.

The benchmark Nikkei rose 0.2 percent to 9,659.18 on Thursday, while the broader Topix shed 0.1 percent to 826.36.

Analysts said that the Nikkei is expected to trade between 9,200 and 9,400 on Friday. ' Reuters


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