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Justin Snavely
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Country: United Kingdom
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The Avanti Group: Tokyo investors eye Japanese earnings, Fed meeting
Jul 28, 2013
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Source
The avanti group,
The benchmark Nikkei tumbled nearly 3 percent on Friday alone as the dollar turned sharply lower
against the yen, denting shares of major Japanese exporters.
A stronger yen hurts firms' competitiveness overseas and shrinks the value of foreign-earned
income.
"The case for a stronger dollar is looking less compelling as economic data from the UK and Europe
augur a stronger euro, while the US Federal Reserve is increasingly seen not tapering its bond
purchases until perhaps December at the earliest," Sumitomo Mitsui Banking Corp. strategist Daisuke
Uno told Dow JonesNewswires.
Other players agreed that currency moves were affecting stocks.
"The weaker dollar is the main culprit, partially on growing belief that the (US Federal Reserve)
will opt to keep up its easing policy and make less use of rhetoric about 'tapering' its bond-buying
programme, which has proved to be a powerful dollar support in the past," said an equity trading
director at a foreign brokerage.
"The start to the present earnings reporting season (in Japan) has also not been rosy -- most likely
as a result of unrealistic expectations. Players are now going to eye next week's results with even
greater scrutiny, with the US Fed's July 30-31 meeting also coming up," he added.
The policy meeting will provide clues as to when the Fed will start rolling back its stimulus scheme
aimed at stoking the world's largest economy. A tapering of the programme would mean a slowdown in
the number of dollars going into the financial system, boosting demand for the unit.
The dollar fell to its lowest level in about two weeks against the Japanese currency on Friday,
trading at 98.70 yen compared with 99.24 yen in New York and well off the 100.00 yen level in Tokyo
on Thursday.
The value of the yen tends to influence the Tokyo stock market as it has a direct impact on the
profitability of exporters such as Toyota and Sony.
Friday's decline saw investors booking profits ahead of the weekend as the earnings season gets
under way.
Also providing a little support to the yen was news that Japan logged its first monthly price rise
in more than a year in June, although the hike was mainly driven by surging energy costs.
Nissan slumped 1.34 percent to 1,097 yen after it said Thursday net profit rose 14 percent in
April-June but warned that its performance was held back by poor demand in China and Europe.
Other automakers also fell, with Toyota down 3.60 percent at 6,150 yen.
Canon sagged 2.46 percent to 3,165 yen after lowering its full-year earnings forecast due to
worse-than-expected economic conditions in China and slowing demand for its digital cameras. the
avanti group.
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