• search

Nikkei inches up, strong yen weighs on Sony

Written by: Staff
|

TOKYO, May 1 (Reuters) The Nikkei share average inched up 0.12 percent on Monday as pharmaceutical and other defensive stocks drew buyers, offsetting a fall in Sony Corp. and other exporters on concerns about a strong yen denting their profits.

A series of rating changes by brokerage firms following earnings announcements last week divided winners and losers, with Pioneer Corp. and Toshiba Corp. gaining and Japan Tobacco Inc. dropping.

Analysts said many in the market see the yen rising further against the dollar, putting exporters under pressure. The dollar tumbled to a seven-month low against the yen on Monday.

''The effect of the dollar/yen rate on companies is big.

Investors tend to shun exporters at times like this,'' said Shinji Igarashi, equity manager in the sales department at Chuo Securities.

''Instead, investors are flocking to defensive stocks such as drug and food stocks.'' The Nikkei rose 19.48 points to 16,925.71. The TOPIX index rose 0.04 percent to 1,717.17.

Trade was thin ahead of a string of public holidays -- known as Golden Week -- later this week. The Tokyo bourse saw its slowest day of stock trading since July, with just 1.32 billion shares changing hands on the exchange's first section.

Decliners beat advancers 856 to 731.

The dollar fell as low as 113.05 yen on electronic trading platform EBS and by 0630 GMT was changing hands around 113.10 yen. A stronger yen is a minus for exporters as it eats into profits when earnings from abroad are brought home.

NEGATIVE SURPRISES Toru Kitani, senior investment manager at Sompo Japan Asset Management, said many companies are assuming a dollar/yen exchange rate of 110 yen for this business year and the yen's appreciation beyond that level could weigh on the market.

''Japanese corporations have produced conservative outlooks and the way investors took these numbers is that the firms have left room for upward revisions, benefitting from the cheap yen ... but if the dollar/yen falls below 110 yen, investors will expect negative surprises,'' he said.

Sony fell 4.6 percent to 5,460 yen, extending its 5.1 percent slide on Friday, hit by both the currency and its profit outlook.

Canon Inc., which generates three quarters of its sales outside Japan, fell 0.7 percent to 8,650 yen.

Amid growing uncertainty about the yen's movements, investors bought defensive stocks such as drug, food and utilities.

Astellas Pharma Inc. rose 2.3 percent to 4,860 yen and Kikkoman Corp., the world's largest soy sauce brewer, jumped 6.9 percent to 1,437 yen.

Utility stocks advanced, with the electric and gas sector IEPNG.the best performing sector.

Elsewhere, Pioneer rose 2.7 percent to 2,070 yen, adding to a 2.5 percent gain in the previous session, after the electronics maker said it would return to profit in the current year.

The news helped prompt Daiwa Institute of Research to lift its rating on the firm, citing strong demand for car audio and navigation systems.

Shares of Toshiba gained 3.5 percent to 750 yen after the electronics firm posted a 70 percent rise in annual net profit on Friday and Goldman Sachs raised its rating to ''outperform'' from ''in-line''.

Japan Tobacco, the world's third-biggest tobacco company, dropped 2.8 percent to 445,000 yen after Merrill Lynch downgraded its rating on the stock to ''neutral'' from ''buy'' following a worse-than-expected earnings outlook.

REUTERS PV DB1221

For Daily Alerts

For Breaking News from Oneindia
Get instant news updates throughout the day.

Notification Settings X
Time Settings
Done
Clear Notification X
Do you want to clear all the notifications from your inbox?
Settings X
X
We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Oneindia sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Oneindia website. However, you can change your cookie settings at any time. Learn more