Japan's Nikkei average inched up 0.2 percent on Wednesday as an advance in US stocks and upbeat forecasts by Intel Corp brightened sentiment and prompted short-covering. But investors were reluctant to chase the Nikkei aggressively higher as the yen lurked near a 15-year high versus the dollar hit earlier this week.
The market mood improved after the Nikkei lost more than 2 percent on Tuesday, with chip-related stocks advancing after shares of Intel, the world's largest chipmaker, rose on strong fourth-quarter sales and margins. The Nikkei also received support after Japanese core machinery orders unexpectedly jumped 10 percent in August. The benchmark Nikkei ended up 14.87 points at 9,403.51. On Tuesday, it fell 2.1 percent in its biggest daily loss in a month.
The broader Topix dropped 0.2 percent to 822.65. Intel's forecasts raised hopes that the technology sector could end 2010 on a strong note, pushing up chip-related shares, though Hamasaki noted that the impact on the overall market was limited because it was not as if the company revised up their earnings outlooks. Chip-gear maker Tokyo Electron Ltd gained 1.3 percent to 4,550 yen, while Nikon Corp rose 0.9 percent to 1,599 yen and Yokogawa Electric Corp climbed 2.6 percent to 599 yen.
Still, the Nikkei struggled to post strong gains due to the strength of the yen. The dollar gained 0.2 percent to 81.86 yen, not far away from a 15-year low of 81.37 struck on Monday, though it was supported by nervousness that Japanese authorities could intervene the closer it gets to its record low of 79.75 yen. On the technical front, the Nikkei was expected to be supported by positive signals.
The Nikkei faces strong support at the 38.2 percent retracement of its September-October rally and its 55-day moving average, both of which come in around 9,365. Elliott Wave analysis shows the Nikkei could rally to 10,000 as long as it holds above 9,311.
With Japan's earnings season getting into full swing later this month, earnings stories have started to drive stock prices. Some 1.89 billion shares changed hands on the Tokyo exchange's first section, down from a five-month high of 2.88 billion booked last Wednesday. Declining stocks outnumbered advancers, 892 to 604.