Tokyo Stocks Likely to Struggle for Direction Next Week

TOKYO (Jiji Press) — Tokyo stocks are expected to struggle for direction this week, with scheduled events likely to exert only muted impacts on overall trading, market sources said Friday.

Last week, the Nikkei average of 225 selected issues listed on the Tokyo Stock Exchange’s Prime Section fell 523.17 points, or 1.87%, to end at 27,518.31.

Sentiment stayed bullish in the first half of the week with signs of cooler U.S. inflation.

But weaker-than-expected U.S. economic indicators released during the week, such as the U.S. Labor Department’s Job Openings and Labor Turnover Survey for February and Automatic Data Processing Inc.’s jobs data for March, enhanced recession fears and pushed the Nikkei down over 800 points in the two days through Thursday.

A wait-and-see mood intensified Friday ahead of the release later the same day of the U.S. Labor Department’s March employment report, although the market staged a modest rebound.

This week, the Nikkei is expected to move mainly between 27,000 and 28,000, analysts and brokers said.

Brokers agree that the market will lack direction as selective transactions based on earnings announcements will be dominant. Major firms set to release financial statements include department store operator J. Front Retailing and casual clothing retailer Fast Retailing.

Although wariness over the U.S. employment report heightened in advance, “the post-release impact would actually be limited because the series of data showing easier-than-expected job market conditions helped investors brace for the Labor Department report,” said Chihiro Ota, general manager for investment research and investor services at SMBC Nikko Securities Inc.

“The market will be lackluster, especially early in the week, as the European and U.S. markets will be closed Monday for the Easter break,” Ota added.

Another key U.S. economic indicator, the consumer price index, is scheduled to be released Wednesday. But it also may stop short of moving the market in one direction at a time when “players have increasingly become sensitive to developments on the domestic front, such as recovering inbound travel demand and the TSE’s call on undervalued listed firms to increase their market valuations,” Kazuo Kamitani, strategist at Nomura Securities Co., noted.

“The Nikkei is expected to fluctuate between its 25- and 200-day moving averages,” Kamitani said, suggesting that the benchmark index will be confined roughly in the 27,370 to 27,740 range.

Ryuta Otsuka, strategist at the investment information department of Toyo Securities Co., predicted that “the market will gain ground on buying the dip after its correction [last] week.”