Nikkei slips, still set for best April in 20 years

Sweeping stimulus measures announced by the BOJ drive the index

The Nikkei average eased on Tuesday following weak earnings guidance from Fanuc Corp and Honda Motor, although it remains on track for its best April performance in 20 years on the back of sweeping stimulus measures unveiled this month.

The Nikkei slipped 0.4% to 13,833.28. The benchmark has risen 11.5% this month and is heading for its best April performance since 1993, largely driven by the Bank of Japan's plans to inject $1.4 trillion into the world's third-largest economy in less than two years to revive growth.

"One of the biggest takeaway's for the exporters in this earnings season is the conservative FX assumptions they have taken in their guidance for 2013," said Stefan Worrall, director of equity sales at Credit Suisse in Tokyo. "That's probably a bit disappointing."

"What this underscores is that the BOJ and policymakers still have their work cut out for them to try to convince corporate Japan that the weaker yen is sustainable," he added.

Expectations that Japanese companies would sharply lift their earnings forecast for this financial year ending March 2014 have been high after the yen has weakened 22% since mid-November, when Shinzo Abe, who became prime minister in December, promised expansionary monetary and fiscal policies to revive the world's third-largest economy.

During the same period, the Nikkei has jumped nearly 60%.

Index heavyweight Fanuc Corp slumped 8% to a three-week low after the industrial robot maker forecast a first-half operating profit of 62 billion yen, representing only 35% of the full-year forecast of 175.4 billion yen by 19 analysts polled by Thomson Reuters I/B/E/S. It was the top-weighted loser in the Nikkei.

Honda Motor Co lost 3.4% after the automaker's annual operating profit estimate also came in below market consensus.

Of the 39 Nikkei companies that have reported quarterly results, 56% of them came in below market expectations, according to Thomson Reuters StarMine. That compared with 62% in the previous quarter.

The broader Topix index gained 0.3% to 1,164.24 on Tuesday morning.

Nomura Holdings Inc climbed 2.5% after Japan's largest brokerage reported its highest quarterly profit in seven years as it cashed in on the surge in domestic shares and booked a one-off gain on the sale of a property affiliate's stocks. It was the most traded stock on the main board by turnover.

Rival Daiwa Securities Group Inc rose 3.8%, while the securities sector added 2.9%.

Lender Sumitomo Mitsui Financial Group advanced 0.9% and was the fourth-most traded after Japan's third-largest bank said it expected year-end net profit to rise 52% to a record high of 790 billion yen as a rally in domestic stock prices boosts earnings.