Japanese shares are likely to see jittery trading amid worries about rising oil prices and the earnings of US companies, particularly banks, analysts said on Friday. Investors will also monitor Federal Reserve chairman Ben Bernanke's congressional appearance for clues on the outlook for US interest rates, they said.
"With major corporate and economic announcements in the pipeline, the Nikkei index is likely to be influenced by the external environment, including oil prices," predicted Tsuyoshi Nomaguchi, senior strategist at Daiwa Securities.
In the week to July 11, the headline Nikkei-225 index continued to slide, losing 198.20 points or 1.50 percent to end Friday at 13,039.69. The broader Topix index of all first section shares on the Tokyo Stock Exchange fell 11.97 points or 0.92 percent to 1,285.91.
Nomura Securities forecast that the Nikkei will hover between 12,700 and 13,400 points in the coming week, as investors wait for leads from the United States. Earnings announcements from major US companies including Intel, J.P. Morgan Chase, Merrill Lynch, Microsoft and Citigroup will help set the tone of investor sentiment for the coming week, analysts said.
The US government will also release June consumer prices, industrial production and retail sales next week. In Japan, the Bank of Japan will hold a policy decision meeting, after which governor Masaaki Shirakawa will hold a press conference on Tuesday. No change to rates is expected any time soon given the weak domestic economy.
Nomaguchi said he believed that particular focus should be paid to Bernanke's comments to assess the chances of a rate hike by the US central bank. "It is our view that lowering of oil and gasoline prices through a (US) rate hike is among the most effective ways to stimulate the US economy," he said.
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