Nikkei seen edging higher but yen overshadows exporters

Japan’s Nikkei share average looks set to rise on Thursday after gains on Wall Street, though the yen’s appreciation overnight is likely to limit investor appetite.

“Yesterday there were 106 shares that hit year-to-date lows on the main board. So today we are likely to see short-covering in those shares supporting the market,” said Masayuki Doshida, senior market economist at Rakuten Securities.

The Nikkei could test an important chart level at its 25-day moving average, which comes in around 8,810. Though market participants are not convinced it will gain enough traction to make a clear break above that point, especially as the yen is threatening to hit another one-month high.

The yen stood at 78.80 per dollar, a stone’s throw from Monday’s one-month peak of 78.69 yen.

Further gains in the yen will put an extra burden on exporters such as car makers and electronics manufacturers, already smarting from worries about a global slowdown.

“There will be some buying today but still it’s a bit hard to buy cyclicals,” said a fund manager at a Japanese asset management firm.

Market players said the Nikkei would likely trade between 8,700 and 8,850 on Thursday, compared to Wednesday’s close of 8,727.

Nikkei futures in Chicago closed at 8,775, up a tad from the close in Osaka at 8,740.

The Nikkei slipped on Wednesday, failing to maintain early gains as falls in other Asian markets offset guarded economic optimism after some firm US corporate earnings.

STOCKS TO WATCH

– Mizuho (8411.T)

Mizuho Financial Group settled civil charges its US unit obtained false credit ratings on a 2007 mortgage bond deal stuffed with sub-prime assets, in the latest case to come out of the financial crisis.

– Otsuka Holdings (4578.T)

Otsuka’s operating profit in April-June increased only about 4 percent from a year earlier to 48 billion yen, due to sluggish sales growth in its main anti-psychotic drugs in the United States, the Nikkei business daily reported on Thursday.

But the company is likely to maintain its estimate for an 11 percent increase in annual operating profits.

– Yokogawa Electric (6841.T)

Yokogawa Electric’s operating profits surged about 500 percent to 3 billion yen in April-June from a year earlier, thanks to robust demand from emerging economies for control equipment for energy plants, the Nikkei reported.

Its annual profit now looks likely to beat the company’s current estimate of 19 billion yen, the newspaper said.

http://www.reuters.com/article/2012/07/18/us-markets-japan-stocks-idUSBRE86H1OL20120718

 

Category: Japan