Nikkei seen in narrow range; yen, earnings in focus

TOKYO (BestGrowthStock) – Japan’s Nikkei average is likely to move narrowly on Thursday, with investors reluctant to actively place bets as the earnings season continues to heat up, but it may draw support from a halt in the yen’s advance against the dollar.

Canon Inc (7751.T: ) will be in focus after the company said it now expects operating profit for the full year to December 31 of 390 billion yen ($4.8 billion) versus a previous forecast of 360 billion yen and just under a consensus forecast.

The U.S. traded stock of Canon (CAJ.N: ) was a tad lower, ending down 0.2 percent.

Another market focus is the Bank of Japan’s one-day policy meeting, in which it is expected to cut its growth forecast and predict a very slow exit from deflation, signaling it is ready to ease its policy further in months ahead if the yen’s climb threatens to stunt growth.

“The market will be rangebound as we have the BOJ’s policy meeting and as the earnings season continues. But at the same time, the yen’s advance seems to be at a halt and ample liquidity likely continues to help global stocks,” said Hiroichi Nishi, general manager of equity marketing at Nikko Cordial Securities.

“Trade in stocks that have earnings-related news will likely be the main driver. Canon will be a focus after it revised up its forecast but that was below consensus, though I don’t expect the stock to sharply fall as it had already lost some ground.”

Nikkei futures traded in Chicago closed at 9,420, almost unchanged from the Osaka close.

The benchmark Nikkei (.N225: ) is likely to move between 9,350 and 9,500, market players said. On Wednesday, it closed up 0.1 percent at 9,387.03.

The Nikkei’s support is seen solid at last week’s intraday lows around 9,310-9,320 and the upper level of its daily Ichimoku cloud near 9,300. Some technical resistance likely stands at the 25-day moving average, now at 9,488.

The U.S. dollar rallied as investors continued to unwind bets against the greenback before a highly anticipated U.S. Federal Reserve meeting. The greenback hit a two-week high just shy of 82 yen in the previous session.

Market participants have begun to scale back expectations of the Fed’s intentions after The Wall Street Journal said on Wednesday it expected the Fed to commit to bond purchases worth only “a few hundred billion dollars” and stagger them over several months.

That compared with a Reuters survey this month that found markets expecting the Fed to announce a so-called QE2 stimulus of between $500 billion and $1.5 trillion at its November 2-3 policy meeting.

The Fed’s move and its impact on the dollar will largely determine further action from the Japanese central bank, but having just eased policy three weeks ago, the BOJ looks certain to refrain from new steps when it meets on Thursday. The focus will thus be on its twice-yearly economic outlook.

A host of more earnings from technology companies is scheduled for later in the day, including those from Sharp Corp (6753.T: ), NEC Corp (6701.T: ), Sanyo Electric (6764.T: ) and Nintendo (7974.OS: ).

Wall St falls on lack of Fed stimulus clarity (.N: ) > Dollar rallies as Fed questions swirl Bonds fall as growing doubts wipe out QE2 froth (US/: ) > Gold drops 1 pct on Fed stimulus uncertainty Oil dips as dollar jumps on U.S. easing doubts.

STOCKS TO WATCH

— Fujitsu Ltd (6702.T: )

Fujitsu, Japan’s largest IT services vendor, beat expectations with a doubling of quarterly operating profit but cut its annual sales outlook as it copes with a firmer yen and corporations rein in IT spending.

— Aeon Co (8267.T: )

Japanese retailer Aeon will bid for Carrefour’s (CARR.PA: ) Singapore and Malaysia stores but not make an offer for its Thai outlets in a second round of bidding next month, two sources with knowledge of the matter said.

— Yamada Denki (9831.T: )

Consumer electronics retailer Yamada Denki on Wednesday raised its full-year net profit forecast to March by 15.5 percent to 67.9 billion yen, citing a boost from solid demand for TV as well as for refrigerators and air conditioners due to the unusually hot summer.

(Reporting by Aiko Hayashi; Editing by Joseph Radford)

Nikkei seen in narrow range; yen, earnings in focus