TOKYO (Thomson Financial) - Japanese shares are expected to open lower on
Tuesday, tracking modest losses on Wall Street after a rebound in oil prices
sparked profit-taking following a big rally last week.
Oil rose on concerns that the threat of new sanctions against Iran over its
nuclear program may escalate tensions in the Middle East. Light, sweet crude
rose $2.16 to settle at $131.04 a barrel on the New York Mercantile Exchange.
But the market may see some support from the U.S. earnings season after Bank
of America Corp. beat analysts' forecasts and joined Citigroup Inc., Wells Fargo
& Co. and JP Morgan Chase & Co. in delivering stronger results than the market
anticipated.
The positive earnings surprises may "prompt some technically-driven
short-covering among investors who had built sell positions due to anxiety about
worse-than-expected results," Mizuho Research Institute senior economist Koji
Takeuchi said.
"But given strong uncertainties about corporate profits and the economy in
the United States ahead, upside is likely to be limited too," he said.
Japanese investors are likely to focus on the set of economic data to be
released this week,
including the trade surplus data on Thursday and the consumer price index on
Friday.
"Trade statistics may underscore a slowdown in demand in overseas economies,
while the CPI may cast concerns about consumer spending," Takeuchi said.
On Wall Street on Monday, the Dow Jones industrial average fell 29.23
points, or 0.25 percent, to 11,467.34.
The Chicago-traded Nikkei futures contract settled at 13,200 points, up from
12,930 on the Osaka Securities Exchange on Friday.
Japanese markets were closed on Monday for a public holiday.
The Nikkei 225 Stock Average closed down 84.25 points or 0.7 percent at
12,803.70 on Friday, while the broader Topix declined 11.22 points or 0.9
percent to 1,252.43.
Ahead, the Ministry of Economy, Trade and Industry will release before the
opening bell the all-industry activity index for May.
In the afternoon, the Japan Chain Stores Association will release
supermarket sales while the Japan Franchise Association will release convenience
store sales, both for June.
On the corporate front, Shin-Etsu Chemical Co. and KDDI Corp. will report
business results for the April-June quarter.
Stocks to watch include Toshiba Corp. and Matsushita Electric Industrial Co.
Ltd. on a report that their joint venture plan to launch mass production of
small, high-image-quality OEL (organic electroluminescent) display panels by
building production lines at its Ishikawa Prefecture factory by the autumn of
2009, to take advantage of rapidly growing demand.
KDDI Corp. may be active on a report that Japan's second-largest telecom
company is expected to post operating profit at the upper 120 billion yen level
in the April-June quarter, down some 10 percent or the first profit drop for the
period in three years.
($1 = 106.72 yen)
yasuhiko.seki@thomsonreuters.com
yas/ms
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