Nikkei slips

The Nikkei share average fell on Tuesday after downbeat domestic earnings reports and fresh worries about Europe prompted profit-taking in exporters and recent gainers. Consumer electronics maker Panasonic slid more than 5 percent after it forecast a full-year net loss of about $5.5 billion, its biggest in a decade, as it moved to cut unprofitable businesses deeper and faster than first planned.
An unexpected fall in Chinese PMI data hurt shares of China-related firms, and the shipping subindex was the worst performer on the Tokyo Stock Exchange, falling 3.7 percent. "Stocks are under pressure mainly because so many earnings reports have contained bad news," said Yutaka Shiraki, senior strategist at Mitsubishi UFJ Morgan Stanley Securities.
Market participants were also keeping close watch on the yen amid scepticism that Monday's intervention by Japanese authorities to weaken the currency would have a lasting effect. While a strong currency eats into exporters' profits and has been a major factor behind many firms cutting their full-year earnings guidance, some said market behaviour indicated that recent yen strength had been already factored into many investors' positions. "There is no longer any direct correlation between day-to-day yen moves and recent stock market moves," said Masayoshi Okamoto, head of dealing at Jujiya Securities.
The Nikkei average lost 1.7 percent on Tuesday to end at 8,835.52, slipping further from Monday' three-month intraday high of 9,152.39 hit just after Tokyo stepped into the currency market. The broader Topix index dropped 1.3 percent to 754.50. Volume was relatively thin, with 1.47 billion shares changing hands, below Monday's 1.78 billion and Friday's 2.16 billion. More than twice as many issues declined on the main board as those that gained.
Some strategists said that, despite this week's losses, the Nikkei would remain in an uptrend from a low hit in early October as long as it stays above major support at its 25-day moving average, now at 8,725. The charts show, however, that the Nikkei on Monday formed a "shooting star" candle pattern, which typically occurs at the top of uptrends. Some analysts think this could indicate a bearish shift in market sentiment.
Panasonic tumbled 5.1 percent to 768 yen after issuing its net loss forecast, with many market players saying that, while it was cutting unprofitable businesses, it was unclear how it would be able to generate profits from the businesses that remain. Honda Motor ended flat at 2,406 yen, outperforming rivals despite withdrawing its annual earnings guidance on Monday due to uncertainty in foreign exchange markets and the as yet unknown impact of floods in Thailand.
Some market participants said investors may have already priced in the worst of the damage from the floods and the strong yen, as many Japanese exporters are trading close to their book value. Honda is traded at just over its book value. Other investors who sold Honda shares short are also likely buying to take profits on those positions. Rival car makers slipped, with Toyota Motor Corp falling 1.8 percent and Nissan Motor Co losing 1.9 percent.
Fuji Heavy Industries fell 4.1 percent to 489 yen, after the automaker said it expected an operating profit of 30 billion yen ($384.7 million) in the year to March, well below the median analyst estimate of 44 billion yen according to Thomson Reuters Starmine.