TOKYO, Oct. 19, 2009 (Xinhua News Agency) -- Japan's 225-issue Nikkei Stock Average closed down 0.21 percent on Monday following Friday's three-week closing high, shedding 21.05 points to 10,236.51. The broader Topix index of all First Section issues on the Tokyo Stock Exchange was up 4.85 points to 905.80.
Ailing Japan Airlines Corp. soared 11.9 percent after losing 26 percent of its value last week, staging what market players said was a rebound on a sense the stock had fallen too far.
Market players' predictions at the outset of play Monday that high valuation following gains made since early October would lead to an overall market slip were duly confirmed Monday with exporters like Casio Computer Corp. and Kyocera Corp. (NYSE:KYO) losing momentum gained from previous optimistic results.
"The Nikkei has gained some 500 points since October 5, prompting concern about high valuation, so it wouldn't be at all surprising if it slips a little," said Hiroichi Nishi, General Manager at the equity division of Nikko Cordial Securities.
Friday's losses on Wall Street including disappointing quarterly-earnings from the Bank of America Corp. (NYSE:BAC) and General Electric Co. (NYSE:GE) meant that profit-taking would hit Japanese auto and electronic makers Monday -- sectors that had gained ground last week due to recovery optimism from positive reports emerging from Wall Street.
Strong buybacks in banking and other financial shares initially elevated the overall market until slumps amongst Japanese exporters, due to bleak U.S. quarterly earnings, took their toll on buyer's optimism.
Buying activity Monday was further subjugated as investor's pessimism about economic recovery grew following recent news of U. S. consumer activity, or lack thereof.
The report revealed that U.S. consumer sentiment had dipped disproportionately and unexpectedly in October sending shockwaves of caution to Japanese investors and buyers that mixed news coming from Wall Street may mean the road to recovery will be longer than expected.
Casio Computer Co. saw shares fall 9 percent Monday to 692 yen after it lowered its outlook for the year to March to an operating loss of 5 billion yen (55 million U.S. dollars). Casio's had previously forecast profits for this period to be in the region of 15 billion yen, but falling sales of mobile phones and digital cameras were stated as the reason for the unpredicted losses.
The Nikkei was given a slight shot in the arm by gains made in a number of other Asian share markets, most of which found themselves in positive territory Monday, providing much-needed incentive in a day of largely lackluster trading.
"Basically activity today is dominated by short-term traders, who are buying on dips after selling at the highs. The market is also paring its losses in tandem with movements in the rest of Asia," said Hiroaki Osakabe, a fund manager at Chibagin Asset Management.
"Overall, global stock markets are doing well and the yen's retreat against the dollar compared to last week's levels is contributing to a good environment for the Nikkei," said Noritsugu Hirakawa, a strategist at Okasan Securities.
JAL shares rose to 113 yen Monday however players are cautious about these gains being temporary in light of the company's dire financial situation and potential 'General-Motors-esque' bailout bid.
"There's a lot of problems such as the cost cuts that are being demanded in areas such as pay and pensions, and since this doesn't just affect current JAL employees but its pensioners, the issues have deep roots and will take quite a long time to resolve," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities.
Recovering from Friday's drubbing, Japanese top bank Mitsubishi UFJ Financial Group (NYSE:MTU) closed up 2.1 percent to 480 yen and Mizuho Financial Group (NYSE:MFG) rose 2.3 percent to 176 yen.
Fast Retailing, owner of Uniqlo, dropped 3.7 percent to 14,750 yen after JPMorgan Chase (NYSE:JPM) & Co. cut its rating on the bargain clothes chain stock to "underweight" from "neutral," stating its recent sharp gains as the factor.
Trade was thin Monday on the Tokyo exchanges's First Section with 1.9 billion shares changing hands compared to last week's average of 2 billion.
Trading volume in the First Section was 882.58 million shares and 6.79 million shares for the Second. Decliners outpaced Advancers by 1103 to 663. 234 Listed Companies remained unchanged.
