TOKYO (Dow Jones)--Tokyo stocks fell Monday as weaker base metal and crude futures prices prompted profit-taking on commodity shares such as Inpex and Sumitomo Metal Mining, which have gained strongly in recent sessions.
But increased speculation that the worst may be over for the Japanese economy sparked buying in shares of companies mostly doing business domestically, such as real estate shares, helping keep the Nikkei 225 Stock Average above the psychologically significant 10,000 level.
"Buying of defensive shares supported the Nikkei and kept it above 10,000," said Kenichi Hirano, operating officer at Tachibana Securities.
The Nikkei 225 fell 96.15 points, or 1%, to 10,039.67. The Topix index of all the Tokyo Stock Exchange First Section issues fell 3.72 points, or 0.4%, to 946.82. September Nikkei 225 futures ended down 100 points, or 1%, at 10,040 on the Osaka Securities Exchange.
However, Hirano said that some technical charts suggest the market is overheated after its sharp recent gains, and that could lead to more selling to earn profits. The Nikkei has gained 5.4% this month, and is trading 5.2% above its 25-day moving average of 9543.73.
A retreat in the share prices could push the Nikkei to as low as 9900 this week while the upside should be capped at 10,200 this week, analysts say. The market's direction may also be determined by U.S. economic indicators such as May housing starts, with strong numbers likely to increase bullishness in the Japanese market.
Falling prices of metals such as copper dragged down commodity shares such as Inpex, down 1.9% at Y793,000, and Sumitomo Metal Mining, 4.6% lower at Y1,505.
On the London Metal Exchange Friday, copper prices fell $140 at $5,235.0-$5,240.0 per metric ton, while crude oil futures fell $0.64 at $72.04.
A weak session for tech companies on Nasdaq Friday plus profit taking weighed on some Japanese tech exporters including Nikon, which dropped 4.4% to Y1,540 after gaining 5.7% last week. Real estate stocks were notable gainers, with Mitsui Fudosan rising 3.2% to Y1,757.
Helping real estate shares was an upgrade of the sector by Daiwa Institute of Research to Neutral from Underweight. It said the global credit market is becoming more stable, and there are hopes that asset prices would bottom out during this fiscal year through March.
Meanwhile, Japan Tobacco surged 7.3% to Y325,000 after saying late Friday that it will buy U.K.-based Tribac Leaf and integrate it with JT Group's Global Leaf Procurement Group based in Geneva, to gain more control over price and quality of its tobacco leaves.
"Securing a stable supply of tobacco leaves is a positive," said Credit Suisse analyst Yoshiyasu Okihira, adding that shares look cheap at the current price level.
from the wall street journal
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