Tokyo Stocks Likely to Move Narrowly Next Week

Jiji Press

16:53 JST, March 4, 2023

TOKYO (Jiji Press) — Tokyo stocks are expected to move in a tight range this week, with investors retreating to the sidelines ahead of key events.

Last week, the Nikkei average of 225 selected issues listed on the Tokyo Stock Exchange’s Prime Section advanced 473.99 points, or 1.73%, to finish at 27,927.47 on Friday.

The market struggled for direction until Thursday amid an absence of major news. The Nikkei was stuck in a narrow range around 27,500.

On Friday, however, stocks rallied amid growing hopes for a Chinese economic recovery, pushing the key index close to 28,000.

This week, the Nikkei is expected to move mainly between 27,300 and 28,300, analysts and brokers said.

The prevailing view is that investors will refrain from active transactions ahead of the Bank of Japan’s two-day policy meeting ending next Friday and the U.S. Labor Department’s employment report for February expected later the same day.

“Uncertainties over how long and how far the [U.S. Federal Reserve] will raise interest rates will continue to cap the market’s topside, while its downside will be underpinned by anticipation of China’s recovery,” said Maki Sawada, strategist at Nomura Securities Co.

While forecasting that the Nikkei will move mostly in the upper 27,000 range, she pointed to the likelihood of the market suffering a setback early next week in reaction to Friday’s sharp rise.

It is largely expected that the BOJ will keep its easing policy unchanged at the upcoming Policy Board meeting.

Ryuta Otsuka, strategist at the investment information department of Toyo Securities Co., does not rule out the possibility of the central bank “making a [hawkish] change in its yield-curve control at the last policy-setting meeting to be held under the leadership of Haruhiko Kuroda,” whose term as BOJ governor ends in early April.

“In that event, the yen will go up against the dollar and stocks will go down,” Otsuka noted.