Nikkei seen range-bound on caution before earnings

By Aiko Hayashi

TOKYO (BestGrowthStock) – Japan’s Nikkei average is expected to move narrowly on Tuesday after hitting a four-week closing low a day before, with tech stocks seen higher after iPod maker Apple Inc (Read more about Apple stock future.) (AAPL.O: ) reported sharp gains in quarterly revenue and profit.

A rebound on Wall Street and stabilizing currency moves will likely help the index, but caution heading into the earnings season will probably put a lid on gains, market players said.

Japan’s earnings season heats up this week, with big-name companies including Canon Inc (7751.T: ) due to report later in the week.

“Japanese stocks are starting to look cheap as it’s shed 4.3 percent from its recent high. Apple’s earnings and gains in commodity prices will also help today,” said Hiroichi Nishi, general manager of equity marketing at Nikko Cordial Securities.

“But the market is likely to be range-bound as investors want to see economic indicators and more earnings as the reporting season swings into full gear.”

KDDI Corp (9433.T: ), Japan’s No.2 telecoms firm, and Jupiter Telecommunications Co (4817.Q: ), will likely draw attention after KDDI said it plans to buy a $4 billion controlling stake in the country’s biggest cable TV firm.

Nikkei futures in Chicago closed at 10,505.00, almost unchanged the Osaka close.

The benchmark Nikkei (.N225: ) is likely to move between 10,400 and 10,600 on Tuesday, market players said.

It slipped 0.7 percent on Monday to 10,512.69, its lowest finish since December 25 and below its 25-day moving average of around 10,600. It was down 4.3 percent from the recent high of 10,982.10 hit in mid-January.

U.S. stocks (Read more about the stock market today. ) snapped a three-day slide on Monday as signs that Federal Reserve Chairman Ben Bernanke would win a U.S. Senate vote for a second term helped ease investors’ concerns. (.N: )

After the closing bell, Apple reported much better quarterly margins than expected on record sales of iPhones and Mac computers, driving a big jump in quarterly revenue and earnings.

STOCKS TO WATCH

— Central Japan Railway Co (JR Tokai> (9022.T: )

Central Japan Railway Co (JR Tokai) will join rivals in competing to develop a high-speed railway line in the U.S. state of Florida, as the former state-owned firm looks to sell its super-fast train systems overseas.

— Duskin Co (4665.T: )

U.S. private equity firm Bain Capital said on Monday it would acquire the Japan franchisee of Domino’s Pizza (DPZ.N: ) as it sees opportunities in the country’s niche pizza delivery market.

Bain Capital said in a statement that it would buy Japanese firm Higa Industries Co from Duskin, Daiwa SMBC Capital and Ernest Higa, the founder of Higa.

— Kikkoman (2801.T: )

The soy sauce maker said its subsidiary Nippon Del Monte would close three of its five plants that make ketchup and tomato juice in Japan to save estimated 1 billion yen ($11.08 million) in costs annually.

Kikkoman said it would book 869 million yen in a special charge for plant asset writedown for the nine months ended in December.

— Toyota Motor Corp (7203.T: )

Toyota will offer to repair about 2 million cars in Europe to fix potentially faulty accelerator pedals that led to a massive recall in the United States last week, Japan’s Yomiuri newspaper reported.

— Toshiba Corp (6502.T: )

Toshiba likely earned a 10 billion yen operating profit in October-December against a loss of 158.8 billion yen in the same period a year earlier on cost cuts and a recovery in NAND flash memory chip prices, the Nikkei business daily said.

— Hoya Corp (7741.T: )

Hoya plans to invest 15 billion yen in a new plant to make hard disk glass substrates in the Philippines to boost its production capacity in terms of 2.5 inch glass substrates to as much as 10 million per month starting in August, the Nikkei said.

Its October-December operating profit was likely around 20 billion yen, about 20 percent more than a year earlier, the paper said, on better sales of hard disc drive LCD panel parts.

— Murata Manufacturing (6981.OS: )

Murata likely earned an operating profit of 11 billion yen in October-December, up from a loss of 3 billion yen a year earlier, on sales of ceramic capacitors used in cellphones, LCD TVs and PCs, and its annual operating profit may beat its forecast for a profit of 12.5 billion yen, the Nikkei business daily said.

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($1=90.28 Yen)

(Additional reporting by Mayumi Negishi; Editing by Michael Watson)

Nikkei seen range-bound on caution before earnings