Gains were trimmed in afternoon trade on investor caution ahead of Toyota Motor Corp's announcement after the market closed that its operating profit this year would fall 35 percent to 300 billion yen ($3.7 billion), with Japan's biggest earthquake on record severely disrupting production and slashing sales.
Although that was far below the consensus of a 434 billion yen operating profit based on the average of 23 forecasts by analysts polled by Thomson Reuters I/B/E/S, market participants said the outlook was not surprising and that Toyota was probably
being conservative.
"Toyota's announcement offered little surprise since that (300 billion in operating profit) somewhat falls in the lower end of a range sell-side analysts had been expecting," said Makoto Kikuchi, chief executive officer of Myojo Asset Management.
Bargain-hunting by foreign investors and short-covering by short-sellers have in recent days helped the Nikkei outperform its peers in the United States and many other markets in the developed world.
But market players say profit-taking is likely to set in as the Nikkei's outperformance is essentially just a catch-up phase after Tokyo shares declined sharply right after the March 11 quake.
"People had been expecting downside because of worries about the global slowdown so we're seeing a bit of short-covering. But it's not like we have our own bull factors," said Masato Futoi, head of a stock trading group at Tokai Tokyo Securities.
Yumi Nishimura , a senior market analyst at Daiwa Securities, said that the
Nikkei could next week trade around 9,553.69, the settlement price of Nikkei futures and options contracts expiring in June.
The benchmark Nikkei climbed 0.5 percent to9,514.44 after hitting an intraday high of 9,613.75, rising above its 25-day moving average for the first time in more than
a week. The broader Topix gained 0.5 percent to 817.38.
Analysts said that the index faces resistance from its 65-day moving average, which comes in at 9,638.56, and its 200-day average at 9,828.45, with many seeing the Nikkei capped below the latter level in the near future. For the latest updates PRESS CTR + D or visit Stock Market news Today
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