Tokyo stocks are expected to firm this week following an update earnings forecast from US chip giant Intel while the US economic outlook remains solid, dealers said. The widely held view that the US central bank is likely to keep raising interest rates at the current "measured" pace to fight inflation should support the market, they said.
Investors will closely monitor oil prices and economic data, including revised January-March Japanese gross domestic product (GDP) due out Monday and the May US consumer price index (CPI) Wednesday.
Investors are expected to push up the headline Nikkei index of the Tokyo Stock Exchange after Intel revised up its revenue forecast for the second quarter, thanks to solid demand for microprocessors for mobile computers.
"The semiconductor sector has been on a very firm footing. I expect high-tech shares to rise in the coming week," said Hiroichi Nishi, senior analyst at Nikko Cordial Securities.
"The market is gaining momentum, which should boost a wide range of shares," he said.
Masayoshi Yano, senior analyst at Tokai Tokyo Research Center, said investors took heart in the latest comments by US Federal Reserve chairman Alan Greenspan.
The central bank chief told Congress on Thursday that despite some downside risks, "the US economy seems to be on a reasonably firm footing and underlying inflation remains contained."
"The comment was a confirmation that the United States will not immediately change its policy over hiking rates," Yano said.
The May US CPI and a meeting of the Organisation of Petroleum Exporting Countries in Vienna on Wednesday could change the tone of the market if they offer any surprises, Yano said.
For the week ending June 10, the Nikkei-225 index was nearly flat at 11,304.23, up 4.18 points or 0.04 percent, while the broader TOPIX index of all First Section shares edged up 1.25 points or 0.11 percent to 1,148.97.
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