Thursday, October 11 07:33:52
Japan's Nikkei share average fell to its lowest close in more than two months today on mounting fears that upcoming corporate earnings will be weak after the U.S. results season got off to a slow start. The Nikkei dropped 0.6 percent to 8,546.78 points, losing ground for a third straight session. The benchmark has lost 8 percent since hitting a four-month high on Sept. 19. Ryota Sakagami, chief equity strategist at SMBC Nikko Securities said market participants remained worried that this earnings season would produce a slew of cuts to annual forecasts as well as some negative surprises.
"However, if you look at the current prices of individual companies, they should have priced in downward revisions. The market is overreacting," he said, while adding that the Nikkei could fall as low as 8,250 in a worst-case scenario. SmartEstimates from Thomson Reuters StarMine show expectations for an average negative earnings surprise from Nikkei 225 companies of 1.3 percent for the second quarter results under Japan's fiscal year ending March 2013. On Wednesday, the U.S. S&P 500 fell for a fourth day after Chevron Corp said third-quarter profits would be "substantially lower" than the previous quarter, while Alcoa Inc posted a quarterly loss and cut its outlook for global aluminum demand. ( C) Reuters