TOKYO, Oct 29: Japan’s Nikkei share average rose on Monday morning as investors bet that the Bank of Japan will substantially expand its easing programme when it meets on Tuesday, though NTT DoCoMo Inc weighed on the index after a profit warning.
The Nikkei had added 0.2 percent to 8,954.87 by the midday break after tumbling off a four-week high on Friday. The broader Topix was up 0.3 percent at 753.15.
The Nikkei has gained 5 percent since Oct. 12 on expectations that the BOJ will expand its asset purchases by at least 10 trillion yen, and on hopes that it may commit to injecting cash until 1 percent inflation is achieved.
‘Futures are barely moving and it’s very difficult to either buy or sell a lot today because no one is quite sure of the scale or details that the easing could take,’ said Fumiyuki Nakanishi, general manager of investment and research at SMBC Friend Securities.
Volume was thin, with trading on the main board at just 42.3 percent of its full-day 90-day average.
‘That said, if they were to inject 20 trillion yen, mostly into bonds, it could likely soften the yen again,’ Nakanishi added.
The Japanese currency has firmed slightly after hitting a four-week low against the dollar last Thursday, leaving exporters down or with more modest gains than last week. Automakers Nissan Motor Co and Honda Motor Co rose 0.3 and 0.2 percent, respectively.
Real estate, an industry expected to benefit from possible further purchases of real estate investment trusts by the central bank, was the second-best performing subindex , with a gain of 1.4 pe r cent.
Mobile provider NTT DoCoMo lost 5.3 percent to hit a lifetime low, after cutting its full-year operating profit outlook by 9 percent as it struggles to catch up to iPhone-selling rivals Softbank Corp and KDDI Corp .
‘Ultimately we think this proves that unless DoCoMo introduces the iPhone, the impact on its finances will become all the greater,’ said Morgan Stanley MUFG analyst Tetsuro Tsusaka in a note.
The stock was the most-traded stock by turnover on the main board, ahead of Sumitomo Mitsui Financial Group Inc, which gained 1.5 percent after estimating that first-half net profit beat guidance by a wide margin, partly thanks to its trading of Japanese bonds amid high appetite for sovereign debt.
CORPORATE EARNINGS
Honda Motor Co Ltd, Nomura Holdings Inc, Renesas Electronics Corp are among companies reporting after the bell on Monday.
Sixty-seven percent of the 21 Nikkei companies that have reported results so far have undershot analysts’ predictions in Thomson Reuters’ StarMine.
But many market participants say that exaggerated pessimism ahead of the earnings season has meant robust share price gains for quite a few stocks that did not have results that were worse than analysts’ predictions.
‘Earnings are below expectations but because that’s priced in, it’s tended to be a case of ‘Well, as long as they’re not really bad’,’ said Tetsuro Ii, CEO of Commons Asset Management.
Nippon Sheet Glass Co Ltd rose 5 percent after the Nikkei business newspaper said the company was likely to post a 3 billion yen ($38 million) operating loss for the second quarter, smaller than the 4.5 billion yen loss forecast and narrower than the 8.5 billion yen loss in the first quarter.
NEC Corp added 2.1 percent after making an operating profit of 47.4 billion yen for the first half, despite logging a small operating loss in the first quarter, with analysts expecting it to now beat full-year guidance.
Elsewhere, Hitachi Ltd gained 0.7 percent after sources said it is close to signing a deal to buy U.K. Nuclear power generation firm Horizon Nuclear Power from two German power companies for an estimated 60 billion yen to 70 billion yen ($754-$880 million).
($1 = 79.5600 Japanese yen)
(agencies)
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