Nikkei set to snap 7-day winning streak

Wed Oct 24, 2012 12:44am BST

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TOKYO, Oct 24 (Reuters) - Japan's Nikkei share average is
likely to fall on Wednesday after poor U.S. earnings increase
investor uneasiness about the outlook for Japanese companies,
though expectations of an easing next week from the Bank of
Japan should prevent a big drop.
    Market players said the Nikkei was likely to trade between
8,850 to 8,950, down from Tuesday's close of 9,014.25, and could
test the lower half of that range if HSBC's China purchasing
manager's index disappoints investors this morning.
    Nikkei futures in Chicago closed at 8,910, down 1
percent from the close in Osaka of 9,000.
    "The Nikkei is going to be weak today but it's unlikely to
go below its 75-day moving average at 8,855.35, and its 25-day
moving average at 8,880 could also provide support," said
Toshiyuki Kanayama, senior market analyst at Monex. 
    In New York, weak results from chemical maker DuPont 
and United Technologies Corp hit sentiment as investors
become concerned that the global slowdown is having a bigger
impact on corporate earnings than anticipated.
    Just 37 percent of the 29 S&P 500 companies reporting
results so far have exceeded revenue forecasts, short of the 62
percent average of recent years, while 57.2 percent have beaten
earnings forecasts, which would be the lowest proportion since
2001 if it were to stay at the same level. 
    Expectations for S&P 500 companies have deteriorated from
last month, with its one-month earnings momentum - analysts'
earnings upgrades minus downgrades as a total of estimates -
falling to -3 percent from 2.3 percent last month. 
    Although Japanese companies suffered a larger drop to -12.2
percent from -6.7 percent last month, analysts say poor earnings
have largely been priced into the market.
    Further, there are strong hints of the BOJ leaning towards
easing monetary policy again next week that could offer the
market some support, with investors expecting policymakers to
discuss steps in addition to a further increase in its
asset-buying scheme. 
    The Nikkei rose 3.5 points on Tuesday for a seventh straight
day of gains, its longest winning streak since July 2011.
    
> Weak outlooks doom Dow to worst day in 4 months        
> Euro, AUD on the defensive as data looms               
> Spain, growth worries propel bond prices               
> Gold down 1 pct near $1,700/oz on economic fears       
> Oil slumps on growth concerns, corporate forecast cuts 
    
    STOCKS TO WATCH
    -SUMITOMO CORP, KDDI CORP 
    Sumitomo and KDDI are going to integrate their cable
businesses by late 2013, according to the Nikkei business daily,
after acquiring current market leader Jupiter Telecommunications
 by March through a tender offer of 110,000 per share
for the 30 percent of shares owned by private investors. 
    
    - NISSAN MOTOR CO 
    Nissan is to spend about 30 billion yen ($376 million) to
build a new plant in Thailand near an existing plant to double
production there to 400,000 units, according to the Nikkei
daily. The plant should be running by 2014, the paper said.
    
    - HONDA MOTOR CO 
    Honda will spend around 4 billion yen ($50 million) over the
next two years to expand research facilities in Brazil to
strengthen the development of subcompact cars for the local
market in a bid to capture the country's growing middle class
market.
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