Japan: All Eyes on BoJ and Fed, Background Noise Getting Louder (EWJ)

There's hardly any good news coming out of Japan to help stocks rally. Keeping downward pressure on stocks is the daily dose of, and reaction to BoJ and Fed-speak, high-profile scandals, and now the North Korean missile test threat. Let's take a look at what analysts are saying about the current market situation.

I.

"The lack of visibility in U.S. stocks is one thing, and the risk of a missile test by North Korea is another thing which is making foreign investors reluctant to trade Japanese shares," said Tsuyoshi Segawa, an equity strategist at Shinko Securities. (Source: Reuters)

II.

"People are keeping their eye on the global macro-economic picture," said Hideo Ueki, chief investment officer at UBS Global Asset Management in Tokyo. "Until they know more about that, we can expect the trading to be light and range-bound." (Source: Yahoo! Finance/AP)

III.

Comments from Bank of Japan Governor Toshihiko Fukui late in the session suggesting the central bank remained on course to raise interest rates as early as next month accelerated selling.

"Sentiment was already weak," said Hideyuki Suzuki, investment information manager at SBI Securities, referring to concerns about a slowdown in the U.S. economy, higher interest rates and a decline in U.S. stocks.

"Then the comments from the BOJ governor raised concerns that we may see a rate increase earlier than many people had expected." (Source: Reuters)

IV.

Concerns about a slowdown in the U.S. economy, and the resulting weakness in U.S. stocks, weighed on shares of high-tech firms and other exporters, said Katsuhiko Kodama, senior strategist at Toyo Securities.

"It's kind of impossible to expect an advance in stocks at the moment," he said.

"If the (U.S.) market settles down, we can expect high techs to benefit from the weakness of the yen, but right now that's not going to happen." (Source: Reuters)

iShares MSCI Japan Index ETF (EWJ) 1-year chart: