Reliance Trading Co. Limited – Japanese Market Update – Nikkei Slips Ahead of Earnings
Japan's Nikkei edged lower on Tuesday morning as investors awaited full-year earnings reports, while Sony jumped after Reuters reported that U.S. hedge fund Third Point was again building a stake in the company to push for changes.
The Nikkei hit a four-month high on Monday but the market has stalled as investors wanted more clarity on the state of U.S.-China trade talks and remained cautious ahead a flood of corporate earnings. "The Nikkei has risen to a level where it needs more positive catalysts from companies' earnings," said Jonathan Lloyd, global market strategist at Reliance Trading Co. Limited. "Companies need to show growth stories to convince investors that the Japanese market deserves further gains,"
On Thursday, Yaskawa Electric will start this month's parade of earning reports for the year ended March 31. The automation equipment maker, whose shares gained 0.6 percent on Tuesday morning, is closely followed because it has large exposure to China.
The broader Topix shed 0.6 percent to 1,611.23, with all but six subsectors in negative territory. Defensive sectors such as utilities, real estate and construction underperformed.
Tokyo Electric Power Co tumbled 2.7 percent, Mitsui Fudosan declined 1.6 percent and Kajima Corp d 1.4 percent.
Sony Corp shares surged more than 7 percent in early trade after sources told Reuters that Third Point, which has about $14.5 billion in assets under management, is raising a dedicated investment vehicle to target between $500 million and $1 billion to buy more Sony shares.
Chip equipment stocks also advanced after the Philadelphia SE Semiconductor Index rose overnight. Tokyo Electron advanced 0.7 percent and Advantest Corp gained 1.7 percent.
Makers of currency processing machinery soared after local media reported that Japan is planning to introduce new 10,000, 5,000 and 1,000 yen bills.
Electronic control equipment maker Takamisawa Cybernetics Co jumped 28 percent and currency processing machine maker Glory Ltd soared 7.5 percent.
NHK reported that the government's decision to issue new notes comes before the start of the new Imperial era, Reiwa, on May 1, when Crown Prince Naruhito ascends to the throne.
Declining issues outnumbered advancing ones 1,702 to 355
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