TOKYO, April 26 (Reuters) - Japanese shares retreated 0.3
percent from a nearly five-year high on Friday as investors
booked profits ahead of the Golden Week holidays, though they
were still 4.3 percent higher on the week.
A slight recovery in the yen and a string of disappointing
earnings also undermined the market, preventing the benchmark
Nikkei share average from breaching the psychological resistance
level of 14,000.
The Nikkei closed down 41.95 points at 13,884.13,
after moving in and out positive territory throughout the
session. It rose as much as 0.4 percent at one point to
13,983.87, setting a fresh high since June 2008 and coming
within sight of the 14,000-mark.
Investors locked in profits to hedge risks ahead of a series
of public holidays from April 29 to May 6.
The Bank of Japan kept monetary policy steady on Friday, a
widely expected move after it unveiled aggressive stimulus
measures earlier this month aimed at achieving its 2 percent
inflation target in two years.
After the stock market closed, the BOJ upgraded its
economic outlook, projecting steady growth and rise in inflation
to its target of two percent by 2015.
The yen rose to one-week high of 98.61 yen per dollar
as the BOJ provided no fresh impetus to sell the yen.
"There is little question that today's BOJ meeting has been
a point of focus for the market," said Naoki Fujiwara, chief
fund manager at Shinkin Asset Management.
The benchmark Nikkei has surged 60 percent since
mid-November, when Shinzo Abe, who became prime minister in
December, promised bold expansionary monetary and fiscal
policies to revive the economy.
During the same period, the yen has weakened 22 percent
against the dollar.
On Friday, the broader Topix index fell 1 percent to
1,161.19. Trading volume on the main board was relatively light,
with 3.95 billion shares changing hands, compared last week's
average trading volume of 4.07 billion.
The real estate sector dropped 2 percent and
securities companies lost 1.1 percent as investors
locked in profits in these two sectors seen as benefiting the
most from Japan's reflationary push.
MIXED CORPORATE EARNINGS
Disappointing earnings from companies like Advantest Corp
and M3 Inc also weighed on the market.
"The market obviously doesn't like earnings disappointment.
Things like M3 and Advantest are getting a little bit of a
beating," a senior dealer at a foreign brokerage said.
Tech concern Advantest sank 7.9 percent and was the
top-weighted loser in the Nikkei, while medical equipment maker
M3 dived 10.2 percent after both companies reported
disappointing fourth quarter results.
Canon Inc lost 1 percent, extending the previous
session's 6.4 percent decline after its annual earnings guidance
missed analysts' forecast when it announced its first quarter
results after the bell on Wednesday.
Bucking the trend, construction machinery maker Komatsu Ltd
gained 2.6 percent after its operating profit forecast
for this financial year ending March 2014 beat market consensus,
even though last year's profit failed to meet its twice
revised-down estimate.
Although it is still early in the quarterly reporting
season, only two out of the 16 Nikkei companies that have
reported so far beat market expectations, data from Thomson
Reuters StarMine showed.
"New financial year profit guidance has a greater impact on
share prices than results surprises. Japanese companies
typically issue conservative guidance at the start of the fiscal
year," Goldman Sachs strategists wrote in a note.
"Given the recent sharp forex move, companies in
export-related sectors may set conservative rate assumptions
relative to current spot rates, and if this is the case guidance
could fall well short of market expectations and be perceived as
a headwind."
But Citigroup said investors should not be fazed by
conservative earnings forecasts for this financial year ending
March 2014.
"We expect corporate earnings forecasts to be fairly
conservative. However, we expect them to be revised up, as well
as market consensus forecasts, as we get further into FY3/14, on
the pick-up in the economy and previous yen weakening against
the dollar," it said in a report, adding that it expected the
Topix to reach 1,320 by end-March 2014
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