TOKYO, Oct. 23, 2009 (Xinhua News Agency) -- Japan's 225-issue Nikkei Stock Average edged up 0.2 percent on Friday gaining 15.82 points to close at 10,282.99.
Cautious investors opted to pocket slim gains made Friday following rises on Wall Street and pending Japan's key corporate earnings season which swings into full gear next week. The broader Topix index of all First Section issues on the Tokyo Stock Exchange was down 6.57 points to 902.03.
Stronger-than-expected third quarter earnings from U.S. companies like McDonalds Corp. (NYSE:MCD) and 3M Co. (NYSE:MMM) lifted U.S. stock Thursday and provided Japanese market players with some impetus at the start of play as markets were in positive territory, but losses expanded in the afternoon as investors' reluctance and inactivity became increasingly prominent as all minds were on the eagerly-anticipated volley of key economic indicators expected both in Japan and the U.S. next week.
"With all the earnings we have next week, along with indicators, the approaching end of the month and the weekend, investors are leaning towards profit-taking," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities.
Following China's 8.9 percent economic surge in the third- quarter, Japan-China linked shares were in positive territory such as Hitachi (NYSE:HIT) Construction Machinery Co., Ltd who rose 3.1 percent to 2,335 yen and mining and construction equipment giant Komatsu Ltd. (OOTC:KMTUY) gained 1.3 percent to 1,852 yen.
According to Masayoshi Okamoto, Head of Dealing at Jujiya Securities, "There's a tendency right now for investors to flock to any shares with good news, since the rest of the market is kind of lacklustre right now," he said.
This was certainly true of a wide range of defensive shares who gained ground Friday including Kirin Holdings Co. Ltd., producer of alcohol, soft drinks, food and pharmaceuticals, who shot up 5.5 percent to 1,479 yen following Morgan Stanley's (NYSE:MS) reassessment of the company's rating from "overweight" to "equal-weight", citing investors' undervaluation of the company's by-in-large consistently sound earning performance.
Japanese banks continued a downward trend from Thursday with top lender Mitsubishi UFJ Financial Group (NYSE:MTU) shedding 2.5 percent to 460 yen and Sumitomo Mitsui Financial (OOTC:SMFJY) Group dropping a further 2.2 percent to 3,150 yen.
Japanese Airline Corp. shares, which are down more than 40 percent this year and hit a record low last week, slid 6.6 percent Friday to 114 yen. However Asia's largest carrier made gains of 13 percent on the week, which enabled the cash-strapped carrier to roughly half it's losses made last week.
Japan Airlines Corp., currently carrying U.S. 15 billion dollars in debt is heading for its fourth annual loss in five years. JAL's government-sanctioned task force is seeking a bridge loan of about 180 billion yen to prevent JAL from running out of cash next month and a total capital boost of 300 billion yen from both the government and the private sector.
The U.S. dollar rose 0.4 percent against the yen on Friday to 91.66 yen and many Japanese exporters have set their currency rate assumptions at between 90-95 yen for the year to March.
The Japanese yen strengthened to less than 88 yen to the dollar earlier this month for the first time since late January, originally hurting the outlook for Japan's export-led economy and sending shockwaves of pessimism to domestic retailers and manufacturers about an economic recovery.
"We're seeing a lot of good earnings forecasts and there's a slight trend towards a weaker yen, so by rights the Nikkei should be a lot higher than it is," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.
"But domestic institutional investors appear to be selling, which is keeping the Nikkei from gaining much. Once the earnings are actually out to confirm the forecasts, and currencies settle down, we may see the Nikkei move higher."
Trade was moderate on the Tokyo exchange's First Section, with 2 billion shares on the move, inline with last week's daily average. Declining stocks outnumbered advancing ones across both Sections by 957 to 566 respectively.
