January 27, 2010 / 12:17 AM / 9 years ago

Nikkei set to gain after Fed; earnings eyed

TOKYO (Reuters) - Japan’s Nikkei average is likely to rise on Thursday, with exporters seen higher on improving earnings in the sector and after Wall Street took heart from the U.S. Federal Reserve’s more upbeat reading of the economy.

A shadow of a businessman is casted in front of an electronic board displaying share prices outside a brokerage in Tokyo January 25, 2010. REUTERS/Yuriko Nakao

Canon Inc will draw attention after forecasting its first annual profit growth in three years and more than doubling its profit last quarter, while Toyota Motor Corp will again be in focus after its ADRs slid on concerns about its U.S. recall woes.

Investors also cautiously await U.S. President Barack Obama’s first State of the Union at 0200 GMT. Obama is expected to promise more jobs creation and a slimmed budget deficit.

“We’re likely to see short-covering in shares of exporters as the content of earnings in the sector is improving as shown by companies like Canon,” said Hiroichi Nishi, general manager of equity marketing at Nikko Cordial Securities.

“The Fed will continue its low rate policy, while it indicated the economy is getting better, though slowly. These things are positive news for the market.”

Nikkei futures in Chicago closed at 10,350, up 0.8 percent from the Osaka close, pointing to a higher start.

The benchmark Nikkei is likely to move between 10,200 and 10,400 on Thursday, market players said. It fell 0.7 percent the previous day to 10,252.08 to its lowest close in five weeks.

The Standard & Poor’s 500 Index rose 0.5 percent on Wednesday.

The Fed said the U.S. economy has continued to strengthen and it reiterated plans to end emergency dollar swaps with other central banks. The Fed has kept rates at record lows to nurture an economic recovery held back by high unemployment.

Japan’s reporting season is heating up this week, with companies set to report later in the day including Nintendo Co Ltd, Nippon Steel Corp, Elpida Memory Inc and Komatsu Ltd.

STOCKS TO WATCH

— Sony Corp

Sony will likely post an operating profit of about 100 billion yen ($1.1 billion) for the October-December quarter, helped by a recovery in its video game and LCD TV operations, the Nikkei newspaper said.

— Honda Motor Co

Honda’s operating profit for the October-December quarter was likely between 120-170 billion yen ($1.3-$1.9 billion), roughly twice that of the previous quarter, the Nikkei business daily said.

— Softbank Corp

Mobile phone operator Softbank, will likely post a 27 percent rise in operating profit for the April-December period on the year to about a record 350 billion yen ($3.9 billion), helped by a strong performance from its communications business, the Nikkei business daily said.

— Tokyo Electron

Tokyo Electron, the world’s No.2 chip equipment maker, said on Wednesday it is likely to report far smaller full-year losses than previously expected, thanks to a recovery in the semiconductor market.

— NEC Electronics Corp

Japanese chipmaker NEC Electronics Corp reported a quarterly net loss that was 29 percent smaller than a year earlier, as the struggling chipmaker cut spending on research and production.

— Rakuten

Online mall operator Rakuten said on Wednesday it has agreed to set up a joint venture with China’s top search engine Baidu to launch a virtual shopping mall targeting the world’s largest online population.

Reporting by Aiko Hayashi; Editing by Edwina Gibbs

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