By Hideyuki Sano
TOKYO, July 30 (Reuters) - Japanese shares advanced on Tuesday morning, led by technology firms, as investors looked beyond sluggish earnings in the previous quarter and bet on a potential recovery over the coming seasons.
"I think we are at the final phase of pricing in deteriorating earnings. Investors are starting to see recovery in 2020," said Masayuki Kubota, chief strategist at Rakuten Securities.
"The semi-conductor sector is the easiest example. The inventory adjustment in DRAM and flash memories is coming to an end and we are increasingly starting to see 5G-related demand," he said.
A case in point was chip-making machine manufacturer Screen Holdings 7735.T , which rose 4.7% even though the company cut its annual net profit estimate by 5.6%, citing weaker sales in its printing-related businesses and rising costs.
Investors were also buying up other tech shares that had been hit by concerns over intensifying frictions between the United States and China over trade and technological issues.
Fanuc Corp 6954.T rose 3.9% after the robot maker cut its annual profit estimates on uncertainties from trade frictions. But its quarterly results beat analyst expectations, helping to lift its share price.
Hitachi Ltd 6501.T rose 4.2%, after the manufacturing conglomerate reported a 16.0% fall in quarterly operating profit, due to worsening market for smart phone and car related materials.
Construction equipment maker Komatsu Ltd 6301.T rose 1.4%, although its April-June profits fell short of analyst expectations to drop 22% from previous year.
Japan's industrial output also fell a bigger-than-expected 3.6% to 1-1/2-year lows in June but that did not shake investors' confidence either.
Ahead of that, the Bank of Japan is expected to make its policy announcement later on Tuesday.
While a majority of market players predict no policy change, a small number of them expect the BOJ to make some cosmetic changes to its forward policy guidance in a symbolic gesture of keeping up with easing stances by the Federal Reserve and the European Central Bank.
The Fed is widely expected to cut its interest rates this week for the first time since the financial crisis more than a decade ago. (Editing by Shri Navaratnam)
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.