Nomura Says Topix Near Sensitive Level Amid Signs Uptrend Intact

(Bloomberg) -- Several failed attempts by the Topix index to climb past a key technical level have left investors nervous, even amid signs the benchmark may eventually succeed, according to Nomura Holdings Inc.

Japan’s equity gauge dropped for the first time in four days, retreating from a 14-month high reached Wednesday after U.S. shares rose to a record. Exporters and banks were the biggest drags on the Topix index after minutes of the Federal Reserve’s Feb. 1 meeting left market-implied expectations for a March rate increase below 50 percent. Ministry of Finance data showed foreign investors sold a net 127.9 billion yen ($1.1 billion) of Japan stocks last week.

“The Topix has tried the 1,560 level several times, so investors are sensitive toward that level,” said Shoichiro Yamauchi, an equity-market strategist at Nomura. But “if you look at the 13-week moving-average line, Japanese shares have been solidifying its lower range around that level, and most of the major moving averages are pointing up, so its more natural to think that we’re still in an uptrend.”

Japanese shares have climbed faster than equities overseas since November, so they appear to be taking a rest, according to Yamauchi.

Mitsushige Akino, an executive officer at Ichiyoshi Investment Management Co. in Tokyo, said the yen’s gain Wednesday on the Fed minutes caused investors to sell exporters. Large-cap shares are more likely to face profit-taking from domestic institutional investors, he said.

Summary

• Topix -0.1% at 1,556.25 at the close in Tokyo
• Nikkei 225 little changed at 19,371.46
• Yen +0.1% at 113.24 per dollar after rising 0.3% on Wednesday
• The Nikkei Stock Average Volatility Index fell to its lowest since Aug. 2015 on Wednesday
• Mitsubishi UFJ Financial Group -1%, Sumitomo Mitsui Financial Group -1.6%
• Honda Motor -1.4%, Keyence -0.8%, Mazda Motor -1.2%
• ANA Holdings +2.9% after Mitsubishi UFJ Morgan Stanley said recovery in overseas routes has been stronger than expected
• CyberAgent +5.3% after being raised to buy from neutral at Daiwa
• Mitsui Engineering & Shipbuilding +3.9% after Mizuho raises rating to neutral from underperform
• Yamato Holdings +7.9% after Nikkei report indicates co. will curb delivery volume and then seek large price increases from its biggest clients

For more on Japan markets:
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Japan Renewable Developer Renova’s Shares Jump on Debut in Tokyo
Regional Underdog Shows Japanese Banks How to Beat Demographics
BOJ Said to Plan Greater Clarity on JGB Buying Operations (1)

To contact the reporters on this story: Hideki Sagiike in Tokyo at hsagiike@bloomberg.net, Yuko Takeo in Tokyo at ytakeo2@bloomberg.net.

To contact the editors responsible for this story: Divya Balji at dbalji1@bloomberg.net, Naoto Hosoda, Jonathan Annells