Nikkei likely to gain, eyes on U.S. earnings

TOKYO (BestGrowthStock) – Japan’s Nikkei average is likely to rise on Tuesday, adding to gains made last week to test a level around its key moving average, but market players said big gains may be difficult to come by with attention shifting to the U.S. earnings season.

U.S. stocks (Read more about the stock market today. ) eked out small gains in thin trade, before Dow component Alcoa Inc (AA.N: ) reported a stronger-than-expected second-quarter profit (Read more your timing to make a profit.) after the closing bell, sending its shares up more than 3 percent.

U.S. stock futures were up 0.2 percent in early trade.

“The market will continue to watch U.S. earnings announcements, with Intel reporting later in the day, as well as economic data and moves in the currency markets for more clues,” said Hiroichi Nishi, general manager of equity marketing at Nikko Cordial Securities.

Other Dow components set to report earnings this week include Intel Corp (INTC.O: ), JPMorgan Chase & Co (JPM.N: ) and General Electric Co (GE.N: ).

“There are few worrisome factors that could drag down the market at the moment, and the next focus is whether the Nikkei can go above its 25-day moving average. Still, eyes remain on any developments in the government’s alliance moves,” Nishi said.

Ratings agency Standard & Poor’s warned on Monday it might cut Japan’s sovereign grade as the ruling party’s mauling in a weekend election posed new hurdles for Prime Minister Naoto Kan’s plans to cut huge public debt.

The Democrats still control the more powerful lower house, but they need help from other parties to push bills through the upper chamber.

The Nikkei shed 0.4 percent the previous day to 9,548.11, as market players said the government’s election battering on Sunday had been largely priced in, although worries about policy deadlock could keep further advances in check.

Nikkei futures traded in Chicago closed at 9,600, up 0.5 percent from the Osaka close.

The benchmark Nikkei (.N225: ) is likely to move between 9,500 and 9,650, market players said.

Receding pessimism about the global economy helped the Nikkei rise 4.1 percent last week despite hitting a seven-month low during that period.

The Nikkei’s next upward target is around 9,660, its 25-day moving average, which is a proxy for a one-month moving average that is closely watched in Japan. The next target lies around 10,250, roughly the level of its June high.


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(Reporting by Aiko Hayashi; Editing by Chris Gallagher)

Nikkei likely to gain, eyes on U.S. earnings