Nikkei edges up

Japan's Nikkei average rose 0.4 percent on Wednesday, inching away from two-week lows hit the day before, with chip-linked exporters boosted after Intel's sales and margin forecasts handily beat market expectations. But telecoms firm KDDI Corp weighed on the overall market after a brokerage cut its rating, citing a likely near-term stagnation in earnings growth.
Investors were also wary ahead of Chinese indicators on Thursday, and ahead of more US and Japanese corporate earnings. Some market players warned that as the Nikkei had already risen quite high on expectations for good corporate results, hitting an 18-month high on Monday last week, selling could ensue when results come out unless there are strong forecasts or positive surprises, as with Intel.
"In order to justify even more legs up in some of these share prices, basically forecasts are going to have to be exceptionally bullish. And on balance Japanese companies are not generally ones to give an exceptionally rosy tale," said Michael Newman, head of sales and Japan equity sales at Macquarie Capital Securities.
"On balance, we still believe that Japan as a market has a good upside. But today it's just more of a jockeying ahead of results." The benchmark Nikkei gained 43.67 points to 11,204.90, with support seen solid around its 25-day moving average of 11,000. The broader Topix rose 0.3 percent to 991.10.
"Intel's earnings boosted investors' expectations for solid US corporate earnings, which has led to hopes for similarly good figures for Japanese companies," said Kenichi Hirano, operating officer at Tachibana Securities. "Further rapid gains may be capped for now due to worries about overheating, but the Nikkei is unlikely to push below its 25-day moving average, either. The index could try highs again, perhaps around late April when a lot of earnings reports are announced here."
The Nikkei's relative strength index (RSI) was at nearly 63 after rising to a high of 76 last week. Anything from 70 and above is considered overbought. While daily Ichimoku charts still look bullish, the Nikkei's MACD began to signal selling earlier this week.
Chinese data due out on Thursday is likely to show its economy has grown 11.5 percent in the first quarter, a Reuters poll of 25 analysts showed, its fastest year-on-year growth since the third quarter of 2007. Intel, the world's top chip maker, forecast current-quarter revenue of $10.2 billion, plus or minus $400 million, reinforcing hopes for an acceleration in the tech sector's recovery. Analysts polled by Thomson Reuters I/B/E/S, on average, expect $9.68 billion.
Intel also reported a stronger-than-expected first-quarter profit and lifted shares of Advanced Micro Devices and stock index futures, suggesting it will boost stocks when the market opens on Wednesday. In Tokyo, chip-tester maker Advantest rose 1.4 percent to 2,464 yen and chip gear manufacturer Tokyo Electron shot up 3.6 percent to 6,590 yen. Shin-Etsu Chemical, which makes semiconductor wafers, rose 1.1 percent to 5,570 yen.
Toyota Motor Corp rose 0.9 percent to 3,740 yen. It initially slipped after suspending sales of the 2010 Lexus GX 460 in the wake of a report by influential nonprofit magazine Consumer Reports which said the sport utility vehicle could roll over.
Market players said they thought support would hold at the level of Toyota's 25-day moving average around 3,666 yen, and that bargain-hunting may emerge should the stock slip near that level. Kajima surged 5.2 percent to 242 yen after the construction firm forecast a 26 billion yen ($279 million) operating profit for the year to March 2011. The stock earlier rose as high as 244 yen, its highest since late September.
Market players said negative news seems to have run its course after Kajima also cut its forecast for the year ended in March to a loss of 9 billion yen from a profit of 21 billion yen. KDDI lost 1.1 percent to 478,500 yen after UBS downgraded it to "neutral" from "buy" and cut its target price to 480,000 yen from 670,000 yen. Some 2.3 billion shares were traded on the Tokyo exchange's first section, staying near a one-month high hit last Wednesday. Advancing stocks outnumbered declining ones, 829 to 675.