Nikkei hits one-month high, investors eye corporate earnings
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Japan's 225-issue Nikkei Stock Average closed at a one-month high on Monday, buoyed by a weaker yen which supported exporters such as Honda Motors Co.
The key Nikkei index gained 79.63 points, a rise of 0.77 percent from Friday's close, to 10,362.62, it's highest close since Sept. 24.
The broader Topix index of all First Section issues on the Tokyo Stock Exchange was up 8.69 points, or 0.96 percent, to 910. 72, as investors eagerly await fresh cues from Japanese companies' as Japan's key corporate earnings season swings into full-gear later this week.
Automotive and heavy machinery issues led gainers on Monday as the market's mood was optimistic as the yen dropped and the U.S. dollar rose to a six-week high of 92 yen.
"A weaker yen and expectations that Japanese corporate earnings for the first half of the business year will be fairly solid are helping the market. Gains still lack strength as active buying is scarce, though there's no big sell-off," said Soichiro Monji, chief strategist at Daiwa SB Investments.
Shares in Nissan Motor Co. rose 3 percent, whilst Honda Motor Co., gained 95 yen to 2,900 yen as market players' expectations remained optimistic for positive earnings reports this week and boosted early trade. Toyota Motor Corp climbed 1.7 percent to 3, 650 yen and Sony Corp. saw gains of 1.7 percent to close at 2,715 yen.
"With expectations for upward revisions in the (April to September) corporate earnings already priced in, the market is now focusing on the full-year projections as the reporting season gets into full swing this week," said Hiroichi Nishi, Equity Manager at Nikko Cordial Securities Inc.
Kawasaki Heavy Industries climbed 10 yen, or over 4 percent, to 240 yen on news reports that the firm could gain licensing fees from the Chinese Qingdao railcar maker that won an order worth 45 billion yuan (U.S. 6.6 billion dollars) to build railway cars for a high-speed link between Beijing and Shanghai.
Furukawa Battery Co. Ltd. leaped 13.3 percent to 850 yen, its biggest surge in nearly 9-months. The battery maker more than tripled its first-half estimate to an operating profit of 700 million yen, from a previous forecast of 200 million yen in profits, due to the company's cost-cutting and restructuring at its subsidiaries.
Konica Minolta Holdings Inc. rose 5.6 percent to 924 yen, thanks to Credit Suisse upgrading its rating for the company.
United Arrows Ltd., who operates a growing number of apparel select shops, rose 5.7 percent to 891 yen after the fashion retailer said its first-half operating profit is likely to top its earlier forecast by more than a third, helped by wholesale cost- cutting and restructuring initiatives.
A spokesperson for the company said they now expect a 1.6 billion yen operating profit for the six months ended in September, an upwards forecast from the retailers previous estimate of 1.2 billion yen.
Market activity dropped in afternoon trading as new incentives dried up and resource shares, taking a hit from lower oil and other commodity prices slumping, also impacted previous gains made earlier.
Hiroichi Nishi from Nikko Cordial Securities Inc. pointed to investors being reluctant to take aggressive stances and opting for caution in light of uncertainties over Japan's economic prospects. The Japanese parliament's extraordinary session, which began Monday afternoon, will also be closely monitored as the market seeks information and direction on the new government's growth strategy, according to Nishi.
Hitachi High Technologies Corp. dropped 13.2 percent to 1,602 yen after the chip-maker widened its operating loss estimates for the year to March 2010, by 40 percent and lowered its sales estimate by 6 percent.
It said it now expected a full recovery in investment in semiconductor manufacturing equipment to be delayed until the next financial year starting in April. The company also cited a slower- than-expected recovery in its electronics components and advanced industrial materials operations as determining factors in its performance forecast.
Japan's number one carrier Japan Airlines Lines Corp. gained 2. 6 percent to 117 yen, as investors still have faith in the government's ability to moderate the airline's turbulent financial status.
"JAL remains in a tough situation, but its outlook is no longer full of uncertainty, prompting short-covering in banking shares," said Hirano at Tachibana Securities.
Trading was thin on the Tokyo exchange's First Section with 1.7 billion shares changing hands, down on Friday's volume of 2 billion shares, which was in line with last-week's average.
Across both sections Monday advancing stocks outnumbered declining ones by more than 3 to 1.
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