Japanese stocks prices are likely to move in a narrow range and in subdued trade next week amid continued worries over the recovery of the global economy, analysts said Friday. Expectations for robust quarterly earnings of some US companies are unlikely to boost stocks because investors have already factored these results in, they said.
"It's not that there are negative market leads, but there aren't many positive market leads either to encourage investors to buy stocks," said Seiichi Suzuki, market analyst at Tokai Tokyo Securities.
"Foreign investors have been cautious in recent weeks, and that has overshadowed the Japanese market," he said. In the week to July 16, the Tokyo Stock Exchange's headline Nikkei index lost 1.85 percent, or 176.96 points, to 9,408.36.
The broader Topix index of all first-section shares fell 2.40 percent, or 20.63 points, to 840.58 during the week. Investors' eyes are also on the July 23 announcement of the result of the so-called stress tests of 91 European banks on their ability to survive a new economic crisis, analysts said.
"The focus will be whether those banks which have failed to pass the test will be able to take immediate measures for improvement or not," Nomura Securities said in a note to clients.
In the face of investor concerns about the health of the European banking sector, EU leaders agreed last month to publish the results of stress tests this month. The tests are supposed to show whether banks have enough capital to absorb heavy losses triggered by economic or financial shocks.
European officials hope results of tests on 91 banks accounting for 65 percent of the European banking system will reassure investors worried that some lenders may have hidden the extent of their exposure to bad debt. Analysts also said the stronger yen against the dollar will keep weighing on Japanese exporters if fresh US indicators renew concerns on the world's largest economy.
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