By Taiga Uranaka / Reuters
Tokyo: The Nikkei average edged up 0.1% on Thursday, as gains in defensive stocks such as drugmakers offset steep falls in Denso and other exporters amid growing concern about the economic outlook and health of corporate earnings.
The market finished in positive territory on the last trading day of the month as investors bought defensive shares, considered less vulnerable to economic swings, but the Nikkei spent most of the day in the negative, dragged down by exporters.
Nintendo Co Ltd plunged after the video game maker kept its annual outlook well short of market expectations despite its quarterly profit rising 31.5% on the runaway success of its Wii game console.
Toyota Motor group companies Denso, Aisin Seiki Co Ltd and Toyota Industries Corp were trounced after cutting their outlooks, casting a cloud over the market.
“Toyota group companies have been giving weak outlooks and there is a growing amount of news pointing to Japan’s economic slowdown, which together hurt investor sentiment,” said Yoshihiro Ito, senior strategist at Okasan Asset mangement.
“Wall Street was up, the dollar is trading around 108 yen and there had been expectations for end-month window dressing, but concerns about the macroeconomy and corporate earnings crushed these otherwise positive factors,” he said.
In such month-end window dressing, some fund managers buy up shares to increase the value of their positions as they close books for the month, market participants said.
Following dismal results and outlooks from these group firms, some market players were worried that the ongoing disappointing earnings season might culminate with Toyota’s results.
“Investors are nervous ahead of Toyota’s earnings next week,” said Masanobu Takahashi, chief strategist at Ichiyoshi Securities.
“The auto-related sector was expected to be weak, but investors are getting a fresh shock to see the actual figures, and they could get a final blow with Toyota’s earnings,” he said.
The benchmark Nikkei ended up 9.02 points at 13,376.81, while the broader Topix gained 0.1% to 1,303.62.
Denso plunged 6.5% to 2,815 yen, and has lost 10% since it reported on Wednesday a more than 20% fall in quarterly profits — considerably worse than expectations.
The world’s top auto parts supplier also slashed its forecasts as big cuts in North American vehicle production take their toll.
Mitsubishi UFJ Securities cut its rating on the stock to “3” from “2”, citing the risk of a further downward revision to the firm’s forecast given that Toyota Motor Corp has cut its 2008 global sales target.
Aisin Seiki fell 5.8% to 2,825 yen and Toyota Industries declined 4.9% to 3,130 yen.
Takeda Pharmaceutical gained 4.2% to 5,750 yen and rival drugmaker Daiichi Sankyo Co Ltd climbed 3.9% to 3,230 yen, both among the top contributors to the Nikkei.
“The focus of trade is shifting toward defensive sectors or stocks that are less affected by external factors, rather than those of a cyclical nature,” said Takahiko Murai, general manager of equities at Nozomi Securities.
TDK Corp fell 1.5 percent to 6,500 yen after a source told Reuters TDK plans to buy German electronic parts manufacturer Epcos AG for up to $1.9 billion, in a move to expand sales of industrial-use parts.
In Osaka, Nintendo ended down 8.7% at 52,600 yen.