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Nikkei tanks on weak GDP data

FXStreet (Mumbai) - The Japanese equity markets were penalized by a wave of selling triggered by a surprisingly weak Japanese third quarter GDP data released today.

The Nikkei lost 517.03 points or 2.96% to end the day at 16,973.80 levels. The index ended below the 17,000 mark for the first time in a week. The selling pressure hit the markets after the official data in Japan showed Real GDP for July-September saw an annualized drop of 1.6%.

Among sectors, non-bank financial businesses, insurers and power utilities saw sharp drops. The strength in Yen also pressurized exporter stocks like Automakers Toyota, Honda and Fuji Heavy, camera maker Canon. Meanwhile, the index heavyweights like clothing chain operator Fast Retailing, robot maker Fanuc and mobile phone carrier SoftBank were major losers for the day.

Moreover, the weak GDP triggered speculation that that Prime Minister Shinzo Abe will postpone the consumption tax hike to 10 percent planned for October 2015. However, it remains to be seen whether the stock prices rally again on the speculation of delay in tax hike.

Nikkei Technical Levels

The index has a strong support at 16,713, under which the fall may be extended to 16,533 levels. On the flip side, resistance is seen at 17,108 and 17,194 levels.

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