Nikkei down as tech rally fizzles before earnings
Mon Jan 16, 2006 12:10 AM ET
(Updates to midafternoon)
TOKYO, Jan 16 (Reuters) - Japan's Nikkei share average dropped about 1 percent on Monday as a technology rally fizzled ahead of earnings in Japan and the United States, while a Deutsche downgrade weighed on consumer finance companies.
Shin-Etsu Chemical Co. Ltd. (4063.T: Quote, Profile, Research) stayed weak despite its strong earnings results, while a cheaper dollar against the yen was a drag on auto stocks.
Analysts said investors held back ahead of earnings from Intel Corp. (INTC.O: Quote, Profile, Research) and Yahoo Inc. (YHOO.O: Quote, Profile, Research) due on Tuesday and results from major Japanese companies toward the end of this month.
Masaru Ueda, head of the investment strategy division at Marusan Securities Co. Ltd., said disappointing earnings last week from Alcoa (AA.N: Quote, Profile, Research) , the world's biggest aluminium producer, had put a damper on bullish earnings expectations for U.S. firms, making investors cautious. "When it comes to Intel, earnings have an impact on the market ... investors want to wait and see," he said.
The Nikkei was down 148.89 points at 16,306.06 and the broader TOPIX index was off 0.5 percent at 1,673.33.
The Nikkei average hit a five-year closing high of 16,454.95 on Friday as tech stocks rallied after a series of investment plans lifted expectations for growth in demand for digital home electronics products.
Aiful Corp. (8515.T: Quote, Profile, Research) , Japan's fourth-ranked consumer finance company, tumbled 11.7 percent to 9,140 yen.
Deutsche Securities downgraded its rating on Aiful after a ruling by Japan's Supreme Court on Friday in a case involving an Aiful subsidiary in business lending. The decision mandates much tighter restrictions on the ability of nonbanks to charge unusually high interest rates.
Deutsche also downgraded Takefuji Corp. (8564.T: Quote, Profile, Research) to "hold" from "buy" and both Acom Co. Ltd. (8572.T: Quote, Profile, Research) and Promise Co. Ltd. (8574.T: Quote, Profile, Research) to "sell" from "hold".
Takefuji fell 4.9 percent to 7,600 yen, Acom plunged 9.1 percent to 7,000 yen and Promise was down 5.8 percent at 7,660 yen.
Tech stocks gave up some of their gains from last week.
Matsushita Electric Industrial Co. Ltd. (6752.T: Quote, Profile, Research) , the world's biggest consumer electronics maker, declined 3.3 percent to 2,500 yen, after posting a 10.5 percent increase last week.
Sharp Corp. (6753.T: Quote, Profile, Research) , the world's biggest maker of liquid crystal display TVs, lost 1.4 percent to 2,125 yen. It hit its highest level since May 2000 on Friday, following its plan to boost output at an LCD plant being built in Japan.
Shin-Etsu Chemical was down 1.1 percent at 6,920 yen. The world's biggest silicon wafer maker posted a higher profit for the first nine months of 2005 and stood by its full-year forecasts.
Investors also grabbed profits in auto stocks, taking a cue from a weaker dollar against the yen, which normally makes Japanese products less competitive in overseas markets.
Toyota Motor Corp. (7203.T: Quote, Profile, Research) , the world's second-biggest auto maker whose shares hit a lifetime high of 6,180 yen on Dec. 30, 2005, declined 1.5 percent to 5,880 yen. The stock has lost about 2.5 percent since the beginning of this year. |
