Nikkei set to drop on firmer yen, upcoming earnings in focus

Mon Jan 28, 2013 11:29pm GMT

TOKYO, Jan 29 (Reuters) - Japan's Nikkei share average is
set to extend losses through Tuesday on profit-taking as the
index hovers near a 32-month high, as a firmer yen tempers
appetite for exporters and investors turn their attention to
upcoming earnings.
    Market participants said the Nikkei was likely to trade
between 10,700 to 10,900 on Tuesday after Nikkei futures in
Chicago closed at 10,780, down 0.3 percent from the
close in Osaka of 10,810.
    "The two factors to watch now are whether foreign investors,
who drove the recent rally, remain bullish and continue buying,
and whether retail investors continue to buy into emerging
stocks that are relatively immune to the exchange rate," said
Yoshihiro Ito, chief strategist at Okasan Online Securities.
    The Nikkei has gained around 25 percent since mid-November,
when Shinzo Abe, then a candidate for leader of the opposition
and now Prime Minister, began calling for aggressive monetary
easing, fiscal expansion and a 2 percent inflation target.
    Foreign investors scrambled to buy exporters as Abe's
demands helped weaken the yen by almost 10 percent against the
dollar over that period, improving their overseas revenues.
    However, analysts say the yen's slide may be slowing down,
putting a brake on the Nikkei's upward swing. The benchmark
dropped 0.9 percent to 10,824.31 on Monday after touching on
tough resistance at 11,000, which it touched for the first time
in 32 months.
    Despite the recent rally, the benchmark remains well below
the 2008 financial crisis while the S&P 500 Index and
Germany's benchmark stock index have both already exceeded that
level. 
    The S&P 500 snapped eight straight days of gains on Monday,
with U.S. stocks flat overall. 
    Caterpillar posted a 55 percent drop in quarterly
profit, hurt by weak demand, which could pressure Japanese
construction machinery makers today. However, its stock rose 2
percent after falling 2.2 percent in the last three sessions.
   
> S&P 500 eases, ends longest winning run in 8 years   
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> Prices ease as durable orders rise, supply looms     
> Platinum down 1.2 pct as Amplats delays job cuts     
> Oil rises as Hess refinery closure boosts gasoline   
    STOCKS TO WATCH
    - KDDI CORP 
    Mobile phone operator KDDI hiked its full-year operating
profit forecast for the year ending March 31 by 1 percent to 505
billion yen ($5.57 billion) as contracts for smartphones such as
Apple Inc's iPhones have increased faster than
expected. 
    -NTT DOCOMO INC 
    NTT DoCoMo, the only one of Japan's top three mobile phone
carriers to not offer the iPhone, is likely to post 9 percent
drop in operating profit to 675 billion yen for the three
quarters ended December 31, the Nikkei business daily said, due
to increased spending on promotions.
    -HINO MOTORS LTD 
    Hino Motors is likely to have more than doubled its
operating profit for the nine months ended Dec. 31 to a record
43 billion yen ($474 million) thanks to strong truck sales, the
Nikkei newspaper said. 
    -SUMITOMO MITSUI FINANCIAL GROUP, MITSUI FINANCIAL
GROUP INC, MITSUBISHI UFJ FINANCIAL GROUP INC 
    Japan's top three megabanks will see bumper profits this
year, the Nikkei newspaper said, with Sumitomo potentially
beating its 2005 record net profit of more than 500 billion yen
($5.52 billion) and Mizuho likely posting a 50 percent increase
to 400 billion yen.
    The Nikkei said Mitsubishi UFJ was likely to post a net
profit of 400 billion yen, a 40 percent decrease from the
previous year, due to a one-time gain of 290 billion yen last
year from adding Morgan Stanley to its consolidated statements.
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