Japan shares drop on earnings caution, bond volatility

lunes 11 de mayo de 2015 22:50 GYT

* Corporate earning guidance below analyst forecasts
    * Focus on volatility in global bond markets
    * Toyota shares lucklustre after earnings last week
    * Bridgestone falls on soft quarterly result

    By Hideyuki Sano
    TOKYO, May 12 (Reuters) - Japanese share prices slipped on
Tuesday, losing momentum as investors considered the
implications of conservative earnings guidance from Japanese
companies and volatile bond markets.
    The Nikkei share average fell 0.6 percent to
19,499.18, failing to extend gains in the last two sessions and
slipping further off a 15-year high of 20,252 hit in late April.
    While many Japanese companies expect to see profit growth in
the financial year to March, they are far more conservative than
    "This is a period of time in year when we are likely to see
the biggest gap between analysts' forecasts and company
forecast," said Seiki Orimi, senior investment strategist at
Mitsubishi UFJ Morgan Stanley Securities.
    A case in point was Toyota Motor, the largest
Japanese company by market capitalisation, which on Friday
announced a 1.8 percent increase in operating profits to another
record, but saw its shares sliding after initial gains.
    Toyota is down 0.4 percent on Tuesday, hovering at
three-week lows.
    Companies with more disappointing news fared worse.
Bridgestone fell 4.4 percent after a soft quarterly
earnings report, with its net profit falling 0.5 percent in
January-March from a year earlier.
    Toshiba Corp fell 5.4 percent following a big fall
on Monday after the company withdrew its earning guidance when 
internal investigations found accounting problems.
    Electronic component maker Taiyo Yuden fell 9.6
percent after its profits in the year that ended in March fell
short of market expectations.
    The market is also capped as investors remained wary of
volatile bond prices in many developed countries.
    For example, the U.S. 30-year Treasuries yield rose to
six-month high above three percent on Monday as bond prices
    While higher U.S. yields could help Japanese stocks by
lifting the dollar against the yen, higher borrowing costs could
hurt shares not on just Wall Street but in many other markets as
    "We are potentially at a crossroads. If U.S. monetary policy
begins to tighten, U.S. equity markets may have trouble
rallying, which could translate to some caution in other equity
markets including Japan," said Stefan Worrall, director of
equity at Credit Suisse.
    Some players are also winding back their position of buying
stocks and bonds, funded by borrowing in the euro - so-called
euro-carry trades, said Mitsubishi UFJ's Orimi.
    The broader Topix fell 0.5 percent to 1,589.99 while
the JPX-Nikkei Index 400 dropped 0.6 percent to
    Bucking the trend, Suzuki Motor rose 5 percent
after the company said it expected a record profit in the
current financial year.

 (Editing by Eric Meijer)