Tokyo investors unsure of enough positive leads

Japanese investors are bracing for the start of the annual earning results season amid jitters about the profit outlook due to slowing economic growth and a stronger yen, dealers said on Friday.
While sentiment is gradually improving on hopes of an easing of the global credit crunch, the market may lack enough positive leads to make significant headway next week, they added.
The headline Nikkei-225 index gained 152.72 points or 1.15 percent to 13,476.45 over the week to April 18, rising for four straight days after a tumble on Monday. The broader Topix index of all first-section shares gained 25.44 points or 1.99 percent over the week to 1,304.06.
"We don't see enough incentives that would push share prices over the 13,500 level" next week, said Masatoshi Sato, senior strategist at Mizuho Investors Securities. A slew of earning reports are due from Japanese companies including KDDI, Canon, Nintendo, Honda Motor, Sharp and Toshiba for the fiscal year to March.
Recent earning results in the United States have helped to assuage investor fears of a bigger impact from the subprime mortgage crisis. "The outlook for next week is not so grim," said Toshihiko Matsuno, head of research at SMBC Friend Securities. "Optimistic sentiment is prevailing, especially among foreign investors."
"It's a bit concerning that the trade has been thin, but it seems investors feel comfortable buying. I expect share prices will shift into the range around the 13,500 level" next week, he added. While Japanese corporate profits are expected to have held up relatively well over the past year, analysts say the outlook for the coming year is being overshadowed by high material costs, the weaker economy and a stronger yen.
Honda Motor's operating profit is likely to fall 31.4 percent over the coming year to March 2009 due to a strong yen, higher procurement costs and falling demand in the US, JP Morgan Securities analyst Takaki Nakanishi wrote in a note to clients.
Toyota Motor Corp, which reports annual earnings next month, is expected to suffer its first drop in operating profit in nine years in the year to March 2009 because of sluggish US sales and a stronger yen, the Nikkei business daily reported this week.