February 4, 2019 / 3:02 AM / 5 months ago

Nikkei rises, aided by financials, but weak Sony, Honda results cap upside

* Financials outperform on rising U.S. yields

* Sony dives 8.9 pct, most traded stock by turnover

* Honda tumbles after dismal earnings

By Ayai Tomisawa

TOKYO, Feb 4 (Reuters) - Japan’s Nikkei climbed on Monday morning, led by financial stocks buoyed by solid economic data from the United States, though dismal earnings reports from Sony and Honda Motor capped gains.

The Nikkei share average rose 0.5 percent to 20,897.85 at the midday break.

Financial companies, which hunt for rising yields, outperformed after U.S. yields advanced on a U.S. Labor Department report showing nonfarm payrolls beating expectations and posting the largest gain since February 2018.

Insurers rallied 1.9 percent and banks added 1.3 percent, with Dai-ichi Life Holdings surging 2.4 percent and Mitsubishi UFJ Financial Group advancing 1.1 percent.

Adding to good news, the U.S. ISM manufacturing index rose more than consensus estimates in January in spite of the trade war with China, which has capped growth in the manufacturing sector.

But analysts said that amid a wave of October-December Japanese corporate earnings, investors have been disappointed by some bellwether manufacturers slashing their full-year outlooks.

Investors had expected the current period would see a recovery “but right now they are bracing for the full-year results because it would be difficult to see a turnaround in the January-March quarter,” said Nobuhiko Kuramochi, a strategist at Mizuho Securities.

As of Friday, 503 out of 1,308 Topix companies excluding financials whose business-years end in March had reported their quarterly earnings, and on average, their net profits dropped 18 percent from a year earlier, according to Mizuho Securities.

Sony Corp dived as much as 8.9 percent to a more than a six-week low of 5,011 yen and was the most traded stock by turnover. After the market’s Friday close, the company reported lower-than-expected profit as its previously thriving gaming business sagged.

Macquarie Securities cut Sony’s rating to “neutral” from “outperform” and slashed its target price to 5,800 yen from 7,750 yen, citing greater uncertainty on game profit momentum, and risks in the consumer electronics businesses.

Honda Motor Co fell 4 percent after it said increased discounting on its popular CR-V SUV crossover pushed operating profit down 40 percent in October-December, while quality-related costs and currency volatility also hurt its bottom line.

Factory automation equipment maker Keyence Corp surged 4.8 percent after posting an 11.4 percent rise in April-December net profit.

The broader Topix gained 1.1 percent to 1,582.38.

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