October 24, 2012 / 11:51 PM / 5 years ago

Nikkei seen weighed by weak earnings outlooks, BOJ hopes support

TOKYO, Oct 25 (Reuters) - Japan's Nikkei share average was
seen moving sideways on Thursday with investors weighing up
profit forecast cuts from Nintendo Co Ltd and others
as earnings season gets under way, although expectations of
further monetary easing by the Bank of Japan should provide
    Market players said the Nikkei was likely to trade between
8,850 and 9,000 on Thursday after Nikkei futures in Chicago closed at 8,965, down 0.1 percent from the close in
Osaka of 8,970.
    "There is a very strong wait-and-see feeling at the moment
and most people are playing individual stocks rather than the
market as a whole," said Masayuki Doshida, senior market analyst
at Rakuten Securities.
    "I have a feeling that today's tone could be determined by
whether Nintendo is sold off on disappointment, or stays steady
if investors think there can be no more bad news out." 
    Nintendo Co Ltd cut its annual profit outlook to 20 billion
yen ($251 million), down from July's 35 billion yen forecast and
below the consensus of 27 billion yen, just as it prepares to
launch the newest version of its popular Wii console in the hope
that it will spur growth. 
    Japan's earnings season is about to get into full swing
after profit reports in the United States, now about midway
through the quarterly reporting season, have been disappointing
with tech firms such as Google Inc in particular
logging unexpectedly weak earnings. 
    So far, of the 186 S&P 500 companies that have reported,
just 38.2 percent have posted revenue above analysts'
expectations, below the 62 percent long-term average, according
to Thomson Reuters data.
    Investors are fearing that Japanese companies, saddled with
a strong yen that erodes overseas revenue when repatriated, in
addition to slowing global demand, could end up slashing
forecasts even deeper. 
    The Nikkei fell 0.7 percent to 8,954 on Wednesday, snapping 
a seven-session winning streak prompted by investors judging
that their pessimism about forecast cuts was overdone, as well
as a softer yen that reflected greater risk appetite.
    The benchmark is now seen treading in a tight range until
the Bank of Japan's next policy meeting on Oct. 30, with
investors expecting policymakers to increase its asset-buying
scheme and to discuss future steps. 
    The U.S. Federal Reserve held its course on policy at its
meeting on Wednesday, and said it would keep buying $40 billion
in mortgage-backed debt per month to keep interest rates low
until the job picture gets better. 

> Wall St falls after tepid earnings and steady Fed    
> Dollar holds gains vs euro as Fed stays the course   
> Prices slip after Fed; auction tepid                 
> Gold falls to $1,700/oz as Fed offers few surprises  
> Oil falls on US crude stocks rise, Europe's weak data 
    Nintendo cut its annual profit outlook to 20 billion yen
($251 million) from the 35 billion yen forecast in July and
below the consensus of 27 billion yen, just as it is about to
launch the newest version of its popular Wii console in the hope
it will spur growth.  
    Sharp is to log a group net loss of around 400 billion yen
for the April-September half due to restructuring costs and
valuation losses on inventory, according to the Nikkei business
daily, a loss almost double that projected in August.
    KDDI said on Wednesday that its operating profit for the six
months ended on Sept. 30 had fallen 13.3 percent compared to a
year earlier, while net profit took a dive of 43.1 percent.
However, it maintained its previous forecast of a 500 billion
yen ($6.26 billion) profit for the year ending March 2013.
  Mitsubishi Motors hiked its operating profit forecast for the
six months ended on Sept. 30 by 3 percent to 30.8 billion yen
($386 million). 
    Nidec cut its operating profit forecast for the year ending
on March 2013 to 80 billion yen ($1.00 billion) from a previous
forecast of 95 billion yen, but reported a 5 percent increase in
operating profit in the six months to Sept. 30.
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