Nikkei falls on disappointing profit outlooks; BOJ awaited

The benchmark Nikkei share average fell 0.5 per cent to 17,342.15 in mid morning trade.

By: Reuters | Tokyo | Published:November 1, 2016 8:06 am
Nikkei, japan, Nikkei japan, japan stock market, Bank of Japan, Japan, BOJ, JPMorgan Asset Management, JPMorgan, Japan petroleum, world news Mining stocks were lower after oil prices declined overnight as markets doubted OPEC’s ability to implement planned production cuts. (File Photo)

Japanese stocks fell on Tuesday morning as disappointing earnings forecasts from some bellwether companies dented sentiment, and as investors were cautious ahead of the outcome of the Bank Of Japan’s two-day policy meeting.

The benchmark Nikkei share average fell 0.5 per cent to 17,342.15 in mid morning trade.

Mizuho Securities Research & Consulting estimated that companies which reported their April-Sept results are forecasting a 12.9 percent drop on-year in their full-year operating profit.

The think tank unit of Mizuho Securities compiled the data based on half-year earnings of 485 companies listed on the Tokyo Stock Exchange’s First section. These companies exclude financial firms.

“Weak earnings prospects are hitting sentiment and triggering profit-taking as the Nikkei has risen above the short-term target (of 17,000),” said Yoshinori Shigemi, a global market strategist at JPMorgan Asset Management.

He added that investors are staying on the sidelines before the BOJ’s policy decision later in the day when it is widely expected to stand pat, adding that for the rest of week their focus will be on the Federal Reserve policy meeting on Wednesday and the US jobs report on Friday.

“They want to wait before they take positions,” Shigemi said.

Factory automation machinery maker Fanuc Corp, which is one of the index heavy-weight stocks, tumbled 4.3 percent and contributed a hefty 32 negative points to the Nikkei index after releasing annual forecasts that fell short of market expectations. Fanuc expects an operating profit of 134.70 billion yen for the year ending March 2017, compared to 146.10 billion yen forecast by SmartEstimate.

Panasonic Corp dived 7.5 percent as the company cut its annual profit forecast after bringing forward some of its investment in a battery plant for US electric vehicle maker Tesla Motors Inc.

Mining stocks were lower after oil prices declined overnight as markets doubted OPEC’s ability to implement planned production cuts.

Inpex Corp dropped 1.4 percent, Japan Petroleum Exploration Co shed 1.0 percent. The broader Topix fell 0.3 percent to 1,389.25 and the JPX-Nikkei Index 400 declined 0.3 percent to 12,455.73.