Nikkei unruffled by weak GDP, investors eye stimulus

Japan's Nikkei share average barely flinched on Monday as investors shrugged off data showing lower-than-expected gross domestic product growth but held off from selling on hopes of stimulus measures to boost growth.

Stocks that advanced on Friday continued their rise, with online gaming firm DeNA Co Ltd gaining 2.1 percent after soaring 22.1 percent on Friday due to strong results. Others continued their descent from last week, leaving the index largely unchanged as volume slipped to an eight-month low.

The Nikkei dipped 0.1 percent to 8885.15, stifled as August's event calendar hit a lull and Japanese holidays this week thinned out volumes. The index marked its biggest weekly gain since February last week, rising 3.9 percent on speculation that more global stimulus was on its way.

"At the moment we're just waiting - if the U.S. data out in the latter half of the week is good, then it will allow the yen to soften against the dollar, which would be a positive," said Masayuki Otani, chief market analyst at Securities Japan.

Investors are looking to a raft of data from the United States this week, including jobless claims, retail sales and a Philadelphia Fed Survey, for clues on whether a slowdown in the world's largest economy has bottomed out.

The Nikkei barely moved after data showed Japanese GDP grew just 0.3 percent in the April-June quarter, translating to an annualised increase of 1.4 percent, below the median forecast of 2.5 percent.

"You could say it's a sign that the government hasn't yet put together a proper reconstruction budget," said Hideyuki Fukunaga, CEO of Investrust, referring to work to rebuild after 2011's devastating earthquake and tsunami.

"But low growth is really down to the unseasonably cold and wet weather in April to June, which delayed sales of summer goods. The results should balance out by the end of the year."

Construction-related stocks that should have benefited from the reconstruction drive were suffering from overly confident forecasts.

Taiheiyo Cement Co lost 4.5 percent after the company reported a first-quarter operating profit of 490 million yen, less than half of the consensus, while Daiwa House Industry Co Ltd dropped 3.9 percent as investors deemed its 50 billion yen purchase of contractor Fujita too expensive.

Daiwa House's guidance that its operating profit can improve to 6 billion yen "is optimistic judging from the situation at other construction companies," Deutsche Securities analysts Yoji Otani and Akiko Komine wrote in a note.

The broader Topix closed flat at 746.95 , with the number of traded shares at just 65 percent of its 90-day average, the lowest since December 30. Volume on the Nikkei was 58.1 percent of its 90-day average, also the lowest since the last trading day of 2011.

Yearning for better earnings

Japan's earnings season, now in its last throes, has been largely disappointing, with 53 percent of the 152 Nikkei companies that have reported results falling short of guidance. Many firms have cut full-year profit outlooks due to a strong yen and the impact of a global slowdown on demand.

Some companies that were punished for revising guidance have recovered slightly, due to other news. Sony Corp. <6758.T>, which took a hit after cutting its full-year outlook, gained after saying on Friday it would make internet provider So-net Entertainment <3789.T> into a wholly owned unit. Shares of Sony rose 2.7 percent that day and another 0.2 percent on Monday.

So-net remained untraded with a glut of buy orders, although it was nominally trading at 472,000 yen, a jump of 17.2 percent.

Nippon Sheet Glass Co Ltd climbed 10.7 percent after the Nikkei business daily said the company would resume the construction of a Vietnamese touch screen panel plant after halting it in February due to bad business conditions.

Worse-than-expected sales forced the glassmaker to cut its full-year sales forecast, for which it was dragged down 14.2 percent on August 3.

Sharp Corp dropped 4.3 percent, continuing a sharp descent triggered by a downward revision of its full-year guidance, despite a Nikkei business daily report on Saturday that it is considering selling its liquid crystal display (LCD) modules to Taiwan's Hon Hai Precision Industry.

Market analysts said the market was likely to remain in "holiday mode" this week, characterised by thin trade due to a lack of catalysts.

"It's going to be defined by technical parameters this week," said Toshiyuki Kanayama, senior market analyst at Monex.

"There's quite significant resistance at the 200-day moving average mark around 8,957; it tested that level last week and quickly backed away, and this week there doesn't seem to be any factors that will push it beyond that."

The Nikkei is up 5.1 percent on the year, but is still 13.4 percent off its one-year high of 10,255.15 hit on March 27, hurt by concerns about falling global demand.

Despite the sharp gain in the first quarter and sell-off in the second quarter, intraday volatility has eased sharply this year. Daily swings in the Nikkei have exceeded 2.5 percent for only four trading sessions so far this year, down from 16 for all of 2011. That compared with one such day for the U.S. S&P 500 and 33 such sessions for the Euro STOXX 50.