Japanese shares are expected to see subdued trading interest over the coming holiday-shortened week although US economic data and currency swings may buffet the market, analysts said Friday.
Japanese markets will be closed from Wednesday to Friday for the Golden Week holidays. For the week ending April 28, the Tokyo Stock Exchange's benchmark Nikkei-225 index fell 497.73 points or 2.86 percent to 16,906.23 as investors fretted over a strong yen and high oil prices.
The broader TOPIX index of all first-section shares lost 39.97 points or 2.28 percent to 1,716.43. "The Japanese market will be prone to influence from external factors next week," said Kazuhiro Takahashi, equity general manager at Daiwa Securities SMBC.
"Market participants will be hesitant to take positions until the following week's Federal Open Market Committee (FOMC) meeting," he added. The US FOMC meeting is scheduled for May 10, with expectations increasing that US interest rates are near a peak.
SMBC Friends Securities analyst Fumiaki Nakanishi said that the firmer yen against the dollar would weigh on investor sentiment. "It would be a downside risk for the market if the dollar falls to the 113 yen level again," Nakanishi said.
The dollar sank to 113.83 yen Thursday in overseas trade after Federal Reserve chairman Ben Bernanke hinted that the US central bank was close to a pause in its string of interest rate hikes.
Nakanishi also said that Japanese economic fundamentals are good amid positive domestic earnings results but oil prices remain a concern. "Although oil prices are stable these days, if there is any news from Iran, Iraq or Nigeria that could push oil prices higher again," he said.
Nakanishi forecast a range of 16,500 to 17,500 points for the Nikkei-225 index next week while Takahashi of Daiwa Securities SMBC expects it to stay somewhere between 16,500 and 17,000.
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