Nikkei up from 4-week low, but tech shares drop on HP warning

MARKETS-JAPAN-STOCKS:Nikkei up from 4-week low, but tech shares drop on HP warning

tokyo  October 4, 2012, 8:52 IST

tokyo  10 04, 2012, 09:00 IST

 

Japan's Nikkei share average inched up from a four-week closing low in choppy trade on Thursday morning as robust U.S. economic data and a softer yen offset weakness in technology shares on concerns over dwindling profits.

Recently battered exporters were granted some breathing space by a slightly softer yen, with Nissan Motor Co <7203.T> gaining 4.3 percent, but tech-related shares such as Canon Inc <7751.T> slipped after a profit warning from U.S. counterpart Hewlett-Packard .

Nikon Corp <7731.T> also sagged 3.6 percent after the Nikkei business daily said its interim operating profit would drop 43 percent on the year to 35 billion yen, signalling a slowdown in sales.

The Nikkei added 0.6 percent to 8,800.76 in moderate trade as investors eyed a European Central Bank meeting on Thursday and a Bank of Japan policy decision and U.S. jobs data on Friday.

"People are paying attention to the payroll figures in the hope that they will trigger an upward trend, but there's quite a solid ceiling on the market at the moment," said Hiroyuki Fukunaga, CEO of Investrust. "Macro events will also have less bearing on the market's direction than earnings season, with these downward revisions."

Canon <7751.T> and Konica Minolta Holdings Inc <4902.T> both sagged 2.7 percent, while TDK Corp <6762.T> dropped 1.8 percent after HP warned of a darker outlook for 2013 earnings.

Dealt a double blow from a J.P Morgan downgrade to "neutral" from "overweight", micro motor maker Nidec Corp <6594.OS> slumped 4.2 percent.

"Investors are backing out of tech shares, where profits are looking weaker and weaker," said Yasuo Sakuma, portfolio manager at Bayview Asset Management. "After companies went ex-dividend at the end of September there are precious few reasons to buy."

Yet a more favourable exchange rate, with 77.6 yen to the dollar by the midday break hoisted automakers up a day after data showing massive U.S. sales increases for Toyota Motor Corp <7203.T> and Honda Motor Co <7267.T> in September.

Both stocks gained 3 percent, with Toyota the most-traded stock by turnover on the main board, followed closely by Nissan.

Boosted by the transport equipment sector's gain of 3.1 percent, the broader Topix added 0.9 percent to 733.79 i n moderate trade, with volume at 51.1 percent of its full-day average over the past 90 days.

MIXED CONSENSUS

The Nikkei has stuttered slowly over the past four sessions in low volumes ahead of meetings between the ECB and BOJ meetings, as well as the U.S. jobs statistics on Friday.

Market consensus is mixed over whether the BOJ will ease monetary policy further, as it may be reluctant to expand its balance sheet after swelling it by 10 trillion yen last month, although its latest survey showed increasing pessimism about the domestic economy.

However, in the latest sign that the U.S. economy is getting back on its feet, data showed growth in the country's service sector in September, contrary to economists' expectations of a slight decrease, while the private sector added more jobs than anticipated last month.

"After falling for four days and a totally directionless day yesterday, the market is due for a rebound and the U.S. data will be the catalyst," said Toshiyuki Kanayama, senior market analyst at Monex.

The Nikkei ended down for a fourth consecutive session on Wednesday, losing 0.5 percent to 8,746.87 to a four-week closing low.

"The troughs over the last five months have been gradually getting higher so it's very important it doesn't hit its September 3 low of 8,646," said Kanayama.

The benchmark stooped to 8,238.96 on June 4, and then fell to 8,328.02 on July 25 after another brief rally. Another rebound and pullback left it at 8,646.03 on September 6.

The index is expected to close up 12 percent on the year at about 9,500, according to 22 analysts and fund managers polled by Reuters. The index is currently up 4.1 percent for the year.