Nikkei Edges up; Caution over Earnings, Ukraine Caps Gains
April 22, 2014 2:09 PM EST
Japanese shares advanced on Tuesday, taking heart from a solid session on Wall Street, but gains were limited below the two-week intraday high marked the previous day on caution over upcoming earnings reports and tensions in Ukraine.
Nikkei Stock Exchange
The Nikkei average was up 0.3 percent at 14,556.03 in midmorning trade, continuing its recovery from a six-month low of 13,885.22 hit on Monday last week, after U.S. stocks extended gains into a fifth day.
But the Nikkei traded below Monday's high of 14,649.50, with one major resistance level looming at 14,758, the bottom of the daily Ichimoku cloud.
In the coming weeks, many Japanese companies will be reporting earnings and issuing guidance for the new fiscal year that ends in March 2015.
Investors expect earnings growth of around 10 percent on the whole this fiscal year, but some anticipate that company executives might release more conservative forecasts.
Indeed, shares of Yaskawa Electric slid 6.5 percent on Tuesday after the firm's guidance for the year to next March fell short of market expectations.
Tensions over the situation in Ukraine appeared to be playing less of a role for now, but some investors think markets will remain vulnerable to more shocks.
"I don't think this will lead to a military conflict. Nonetheless, towards the presidential election in Ukraine (planned for May 25), more tensions are likely and there will be phases where share prices will be hit," said Soichiro Monji, chief strategist at Daiwa SB Investments.
Following a gunfight that killed at least three on Sunday, Washington and Moscow each continued to put the onus on the other to ensure tensions are eased.
Still, bulls hope that the Nikkei could break through resistance to retest its April 3 high of 15,164.
"Given the favourable conditions in U.S. share markets and the yen's weakening, I bet the Nikkei will rise to 15,000," said Yutaka Miura, a senior technical analyst at Mizuho Securities.
The yen extended its incremental decline since early April to hit a two-week low of 102.73 yen to the dollar, providing some support to exporters' shares.
Automakers Toyota Motor and Honda Motor rose 0.6 percent and 0.2 percent, respectively. Fanuc, a maker of industrial robots, gained 0.7 percent.
The broader Topix advanced 0.4 percent to 1,175.54, while the new JPX-Nikkei Index 400 added 0.4 percent to 10,697.01.
Trading volume so far was similar to its levels on Monday, when volume was almost 30 percent below its average for the past 100 sessions.
Most Popular Slideshows
- Taylor Swift Named Forbes' Second Highest Paid Country Musician [PHOTOS]
- PageSix: Beyonce & Jay Z Union is Not About Love, All About Business & the Brand
Join the Conversation
- Twin Malaysia Airlines MH370, MH17 Aviation Disasters Create Phobia Among Travellers
- 2014 Ebola Outbreak: ‘Out of control… and Can Get Worse'; Asky Airline Stops Flying to Liberia, Sierra Leone; Liberia Closes Schools
- 5 Food Scandals That Shocked The World
- China Crackdown Against Christianity: Removes Church Cross, Cites Building Code Violation
- Australia’s Richest People Under 30 in 2014
- Samsung Galaxy S5 Alpha Leaks Online: Release Date, Five Features to Wait for New Smart Phone
- Sony Xperia Z3: Release Date, Five Features to Expect from New Android Smart Phone
- Moto X Android 4.4.4 KitKat Update Guide: Schedule and How to Install
- Top Surprising Features Of iOS 8
- Top 4 Reasons Why iPhone 6 Will Hit Big Soon After its Sept 2014 Release Date