Tokyo market seen remaining cautious next week

Tokyo market seen remaining cautious next week

* Over the week to Aug 15, Nikkei-225 index lost 149.0 points or 1.13 percent

TOKYO: Japanese share prices may remain subdued next week amid the traditional summer lull and with worries about the economic outlook weighing on sentiment, analysts said Friday. Investors will continue to watch developments in US markets, while waiting for an interest rate decision by the Bank of Japan as well as more details on measures by Japan’s government to ease the pain of high oil prices. Over the week to August 15, Tokyo’s benchmark Nikkei-225 index lost 149.0 points or 1.13 percent to 13,019.41.

The broader Topix index of all first section shares on the Tokyo Stock Exchange fell 12.62 points or 1.0 percent to 1,247.31. Activity was muted with many players away for summer vacation. Next week might see the return of investors, although there are few obvious catalysts on the horizon for a strong rally, analysts said.

“I hope the share prices will rise a bit next week,” said Seiichi Suzuki, a strategist for Tokai Tokyo Securities Co, forecasting the Nikkei index will stay within a range of 12,900 and 13,300 points next week. Investors will keep an eye out for an economic package due to be announced by the end of the month by the government to try to counter the impact of high energy costs on small businesses and farmers. But the steps are not expected to have a significant impact on overall economic growth. The market is particularly eager to see if the package will include tax exemptions for stock dividends, Suzuki said, adding, “I think it would help easing profit-taking by individual investors.”

Investors will also focus on July trade figures due on Thursday amid concern about weak exports, as well as a two-day interest rate meeting at the Bank of Japan (BoJ) through Tuesday. Although the central bank is expected to leave its key lending rate unchanged at 0.5 percent, there is speculation that it may paint a more gloomy outlook for Asia’s largest economy.

The BoJ announced last month that from now on it would release its assessment of the economy and prices along with every monetary policy decision in an effort to communicate better with markets.

“The BoJ appears to be more concerned about downside risks to growth than higher inflation, and we view a rate hike as unlikely for quite some time,” Lehman Brothers economists wrote in a research note. afp