By Dow Jones Business News,
February 02, 2014, 09:55:00 PM EDT
Nikkei Falls Further, Enters Formal Correction
By Brad Frischkorn
TOKYO--Tokyo shares fell sharply Monday, officially entering a correction--a 10% fall from its recent peak, as a weak
dollar and jittery investors were reluctant to suffer further losses.
The Nikkei Stock average lost 2.0% to end at 14,619.13. That's well down from final day of 2013 trading, when the
index hit a six-and-a-half year peak.
Japan share trading action typically reflects both the dollar and prior Wall Street indexes, and so Friday's U.S.
share selloff following poor earnings reports from Amazon.com and Chevron--combined with a selloff in the dollar--hurt
the market, say traders.
As of the close of TSE trading at 0600 GMT, the dollar was changing hands at Yen102.16.
A weaker dollar is bad for Japan shares as exporters cannot easily lower prices to sell more of their goods abroad.
Euro zone inflation data was also weak, defying expectations, and raised some fears over the possibility of a more
prolonged economic malaise in the region. "There's still some nervousness about emerging markets," says Morgans
investment adviser Christopher Macdonald. "People are wondering if the jitters we saw last month are a sign of some
bigger dislocation in the market."
The performance came in spite of a number of Japan corporate earnings reports that have been generally good.
"A lot of corporate earnings are coming in good or better than expected but this isn't translating into a market
rebound," an equity trading director at a foreign brokerage says. "A combination of a risk-off mood, a falling dollar,
and the Lunar New Year holiday are combining to keep buying at bay."
In Thailand, national elections were marred by protests and ended with inconclusive results that were likely to extend
the country's political paralysis.
"It's important to note that fundamentals are not driving Japanese stocks lower--it's the fault of the weak overall
investing environment," says Yoshihiro Okumura, general manager at Chibagin Asset Management. "With valuations now
steeply discounted and the market nearing its 200-day moving average, here would be a good place to buy."
The Nikkei lost 8.5% in January, its worst month since May 2012.
Write to Brad Frischkorn at firstname.lastname@example.org
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