Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (22407)	8/7/1999 10:27:00 PM
From: Les H	Read Replies (1) \| Respond to of 99985

WEEKAHEAD-Japan stocks seen shaky in holiday lull By Miki Shimogori TOKYO, Aug 8 (Reuters) - Tokyo stocks may test lower levels this week on lingering jitters over the high yen and rising expectations of a U.S. rate hike in a market thinned by summer holidays, traders said. ``We are seeing a dilemma,' said Masaaki Higashida, deputy general manager at Nomura Securities. ``The yen's strength suggests increased foreign capital inflow here but this meanwhile should hurt hopes for an economic recovery.' The benchmark Nikkei average of 225 leading shares ended down 273.95 points, or 1.58 percent, at 17,084.24 on Friday after touching a low of 17,046.12, its weakest level since June 15. September futures were down 140 yen at 17,110. The market was seen hovering between 16,800 and 17,800 in the next few days with short-term sentiment remaining shaky following recent sharp falls, traders said. Over the last three sessions, the Nikkei has lost 885 points, or more than half of its gains from May 28 through July 16, when it hit a 1999 intraday high of 18,623.15. The current strength of the yen poses a headache for Japan's feeble economic recovery. A strong yen in theory makes products of Japanese manufacturers less competitive in the global market while reducing their yen-based export incomes. Last week the dollar tumbled to near six-month lows against the yen but managed to claw higher in New York on Friday when it reached 114.90/00 yen. According to an estimate by Goldman Sachs, a dollar/yen level of 112 yen is seen as break-even for Japan's blue-chip exporters. The chance of joint intervention by Japan and U.S. monetary authorities could curb the speed of the dollar's possible decline but traders are worried that a dollar fall of below 110 yen could open the door to a fresh slide in Tokyo stocks. With this in mind, Honda Motor Co's first-quarter earnings to be announced on Wednesday will be closely watched to see if a strong yen is having any impact on the leading automaker, which relies heavily on U.S. exports. ``It is a sure thing that if the yen advances further in thin trade, the Nikkei will fall under the key level (of 17,000). You just cannot stop falls in stocks only by verbal intervention,' said one trust bank trader. On charts, if the Nikkei breaks below the psychological support of 17,000, there is no strong support until 16,500, which marks the 26-week moving average. An uncertain outlook for Wall Street is another worry for the Tokyo stock market, especially for core Internet and high-tech issues such as Softbank Corp, whose fate is linked with the moves in the technology-heavy Nasdaq composite index. Softbank ended up 4.9 percent at 27,420 yen on Friday after falling in line with recent weakness in U.S. Internet stocks. Softbank has lost 27 percent of its value since July 16, when it hit a lifetime high of 37,800. Yukio Takahashi, manager at Wako Securities, said the market would not move widely ahead of the August 24 meeting of the Federal Open Market Committee (FOMC) -- the U.S. Federal Reserve's decision-making arm -- when an interest rate change is possible. Said Kunihiro Hatae, general manager at Tokyo Securities: ``A rise in U.S. interest rates would change valuations in Internet stocks there. But given the recent correction that took place in the Nasdaq, I think such a risk has been somewhat discounted.' Hatae said that a U.S. rate hike of some 0.25 percentage point would not be much of a surprise for the market. ``People tended to invest in dreams, picking up such issues as Softbank and Fujitsu that have high growth potential. But from now on people will start picking up issues whose earnings are actually improving,' he said.