Nikkei Hits 5-Month Low on U.S. Fears

On Monday the Nikkei stock index touched its lowest levels since March 15 on fears the U.S. economic recovery may be losing steam as well as concerns about a strengthening yen.

The Nikkei fell to 8,619.21 briefly, below the intraday low of 8,656.79 touched on Aug. 9, but above the March 15 closing low of 8,605 in the aftermath of the March 11 earthquake and tsunami.

A speech by Federal Reserve Chairman Ben Bernanke set for Aug. 26 in Jackson Hole, Wyoming is the next signpost that investors are awaiting for possible indications of more quantitative easing ahead.

Investors are also awaiting signs the Bank of Japan may intervene to sell yen to keep the profits of exporters from being eroded even further as they convert them into a steadily strengthening yen.

Some expectation has arisen that BOJ too may consider further monetary easing, possibly at an emergency meeting before next month’s rate review.

But bargain hunting is likely to limit the downside given analysts’ view that Japanese stocks are now substantially undervalued against those of other global exchanges. Firms on the first section of the Tokyo Stock Exchange had an average price-to-book-value ratio of under one — generally considered a clear sign of having been undersold.

The benchmark Nikkei ended down 1 percent Monday to 8,628.13. The broader Topix index slipped 1.2 percent to 742.84 on a volume of 2.0 billion shares, higher than last week’s average daily volume of 1.7 billion shares.