Nikkei likely to drift; resistance to limit gains

TOKYO (BestGrowthStock) – Japan’s Nikkei average is expected to drift on Friday without a clear sense of near-term direction, with any gains likely to be limited by resistance at its 25-day moving average.

Honda Motor Co (7267.T: ) and Toshiba (6502.T: ) may be in focus on earnings news.

The Nikkei business daily said Honda’s operating profit for the past financial year will exceed its earlier estimate while Toshiba said it would beat its operating profit estimate by 17 percent on cost cuts.

U.S. stocks (Read more about the stock market today. ) staged a late-day comeback on Thursday as strong quarterly profits from consumer bellwethers like Starbucks Corp (SBUX.O: ) outweighed worries about Greece’s shaky finances.

That resilience in U.S. shares may help give an initial lift to Tokyo shares, but any gains in the Nikkei are likely to be capped near its 25-day moving average around 11,070, said Masayoshi Yano, senior market analyst at Meiwa Securities.

Japan’s benchmark Nikkei average (.N225: ) closed down 1.3 percent at 10,949.09 on Thursday.

Nikkei 225 futures traded in Chicago finished at 10,930, down slightly from their Osaka close of 10,950.

The Nikkei is likely to trade between 10,850 and 11,150, market players said.

Hiroichi Nishi, general manager in the equity division of Nikko Cordial Securities said there were signs that the Nikkei was supported on the downside. For example, although the Nikkei fell on Thursday, it managed to close well above its intraday low of 10,866, Nishi said.

STOCKS TO WATCH

— Fujitsu (6702.T: )

The world’s No.4 IT services provider might lower its 200 billion yen ($2.2 billion) operating profit target for the financial year to March 2011 because of sluggish demand for solution services and the yen’s strength, its president said.

— Mazda Motor Corp (7261.T: )

Mazda is aiming to sell about 1.3 million vehicles worldwide in the current fiscal year, up 10 percent on the year, the Nikkei business daily said.

— Toyota (7203.T: )

The consumer protection agency in Minas Gerais state, Brazil’s second most populous, blocked the sale of Toyota Motor Corp’s (7203.T: ) Corolla cars in the state from Thursday, citing risks of unintended acceleration in the cars.

— Idemitsu Kosan Co (5019.T: )

Idemitsu, Japan’s third-largest refiner, became the nation’s latest oil firm to announce it will shut refining capacity in a bid to combat declining domestic demand.

Money

(Reporting by Masayuki Kitano; Editing by Edwina Gibbs)

Nikkei likely to drift; resistance to limit gains