* Nikkei regains ground lost on profit-taking after the BOJ
* Hitachi, Komatsu up after maintaining outlook guidance
* Honda recovers after two days of losses
By Sophie Knight
TOKYO, Oct 31 (Reuters) – Japan’s Nikkei share average
jumped 1 percent on Wednesday morning after companies like
Komatsu Ltd maintained their full-year outlooks,
enabling the index to regain ground lost a day earlier when the
Bank of Japan eased in line with expectations.
Index heavyweight Fanuc Ltd lent support to the
benchmark after its client and Apple Inc supplier Hon
Hai Precision Industry Co Ltd posted strong
third-quarter results.
But some market participants said they did not have much
faith in the index’s gains as Wall Street has been closed for
two days due to a massive storm and there was uncertainty about
how U.S. markets would react to the disaster later in the day.
“Results from exporters are not looking good, which makes me
think recent gains, including today’s, are a bit flimsy,” said
Norihiro Fujito, senior investment strategist at Mitsubishi UFJ
Morgan Stanley.
The Nikkei had climbed 1 percent to 8,926.44 by the
midday break, breaking back above its 25-day moving average at
8,837.13.
It had fallen on profit-taking a day earlier to a two-week
low after rallying recently on a softer yen and on expectations
of BOJ easing. The BOJ increased the size of its asset buying
and lending programme by $138 billion, bringing the total to
$1.14 trillion.
Sentiment also picked up after the yen did not firm as much
as investors had feared it would, said Ryota Sakagami, chief
strategist of equity research at SMBC Nikko Securities.
“It’s been rather unclear why the yen weakened so much
recently, so it was encouraging to see that it’s likely due to
the U.S. recovery gathering momentum and not just expectations
of easing,” Sakagami said.
The yen initially dipped to 79.41 against the dollar, but
later eased to 79.53, a slight positive for exporters
fretting about shrinking overseas profit due to an unfavourable
currency rate.
EARNINGS LOOKING UP
Although the Japanese earnings season has been largely
disappointing so far, investors took heart after some firms did
not cut guidance as feared. Construction machinery maker Komatsu
advanced 4.2 percent. Electronics conglomerate Hitachi Ltd
climbed 2.7 percent, hitting a one-week high.
Many firms have slashed their profit outlooks this earnings
season as a global slowdown and a boycott of Japanese products
in China threatens revenues.
Honda Motor Co gained 1.7 percent, following a loss
of 7.3 percent over the previous two sessions after chopping its
annual net profit forecast by 20 percent.
“Honda may be up today but look how much it lost. Their
sales goal in China is optimistic at best,” said Mitsubishi UFJ
Morgan Stanley’s Fujito.
But Fuji Heavy Industries Ltd shot up 7 percent to
an 11-year high after the carmaker hiked its annual operating
profit forecast to 82 billion yen ($1 billion), up 22 percent
from its previous estimate, citing improved margins.
“We expect growth in Japanese sales in H2 of high-end
Impreza, XV and Forester models, thanks in part to supply
increases, and as such we look to ongoing strong profit growth,”
Nomura Securities said in a note.
Fanuc gained 2 percent after Hon Hai’s net profit in
July-September rose 57 percent from a year earlier and about 140
percent from the previous three months.
Ricoh Co Ltd dropped 4.8 percent to a one-month low
after the office equipment maker missed guidance for its interim
operating profit, although it raised its annual dividend to 29
yen from 25 yen and left its full-year operating profit outlook
unchanged.
Major companies reporting after the close include Softbank
Corp, Panasonic Corp, Mitsubishi Electric
and Toshiba Corp.
Softbank was the most-traded stock on the main board by
turnover, up 0.6 percent.
The broader Topix index gained 0.9 percent to 740.30
in moderate trade, with volume at 47.8 percent of its full-day
average over the past 90 days.
