Nikkei set to rise; resource shares to buoy

TOKYO (BestGrowthStock) – Japan’s Nikkei stock average is set to rise on Wednesday after solid U.S. earnings and good data boosted Wall Street for a second day, with resource shares likely to advance after commodities extended gains.

Investors may focus on KDDI Corp after it said regulators had questioned it about its planned purchase of shares in cable network Jupiter Telecommunications Co (J:Com).

Rising sales of previously owned U.S. homes and robust earnings from U.S. bellwethers in the consumer and industrial sectors pointed to a steady rebound in demand and followed a string of encouraging economic news including good manufacturing data on Monday.

“The rises in U.S. and European shares will encourage Japanese investors, while the Nikkei is also at a good level to buy after its recent falls,” said Hiroichi Nishi, general manager at the equity division of Nikko Cordial Securities.

“But trading volume has fallen off a bit recently, and unless that picks up the market will be vulnerable to profit-taking at the highs.”

He added that selling is likely to emerge just under 10,500, where there appear to be a large number of call options.

In testimony before a White House panel on Tuesday, White House advisor Paul Volcker urged Congress to rein in risky investing by big banks to help prevent them becoming “too big to fail.”

But analysts said this testimony, which had been keenly awaited by markets, had lacked concrete details and was unlikely to lead to selling of financial shares.

Resource shares are likely to extend Tuesday gains after copper edged higher and other metals prices rose, while oil climbed nearly 4 percent to top $77 a barrel, gaining on optimism about economic recovery and weakness in the dollar.

Investors will also be watching Japanese earnings. Companies announcing results after the close include Honda Motor Co and Sharp Corp.

The benchmark Nikkei is likely to move between 10,300 and 10,500, market players said. It closed at 10,371.09 on Tuesday.

In a sign the market may open higher, Nikkei futures traded in Chicago closed at 10,450, up 0.8 percent from the Osaka close.

STOCKS TO WATCH

— Nomura Holdings

Nomura reported its third straight quarterly profit on a jump in fees to manage share offerings, in a sign its earnings recovery and global expansion plans are on a solid footing.

Japan’s largest broker reported a 10.2 billion yen ($113 million) net profit for the October-December third quarter, a big swing from a 342.9 billion yen loss in the same period a year earlier when costs related to the Lehman acquisition peaked.

— Fast Retailing

Fast Retailing said on Tuesday that same-store sales at its Uniqlo budget clothing chain fell 7.2 percent in January from a year earlier.

— Toshiba Corp

Toshiba plans to close one of its two domestic NAND factories this year and concentrate assembly of memory chips at the other plant, the Nikkei business daily said.

— Pioneer Corp

Mitsubishi Chemical Corp will likely invest 1-1.5 billion yen for a stake in Pioneer and the two firms will jointly develop organic electroluminescent lighting equipment, the Nikkei business daily reported on Wednesday.

The investment by the unit of Mitsubishi Chemical Holdings Corp will be a key pillar of Pioneer’s restructuring efforts, the Nikkei said.

Stock Investing

(Reporting by Elaine Lies; Editing by Edwina Gibbs)

Nikkei set to rise; resource shares to buoy