Japanese shares are expected to rise in a shortened session this week, with investors expecting strong earnings reports from major companies to underline their optimism about Japan Inc.
Consumer electronics giant Sony Corp, integrated electronics maker Hitachi Ltd and its rivals Toshiba Corp and Fujitsu Ltd are among those that will unveil full-year earnings.
Japanese financial markets are closed on April 29 for the Greenery Day holiday.
Helped by improving business prospects for the business year to next March, analysts see the key Nikkei average poised to test a 33-month high above 12,200 this week, a level it challenged unsuccessfully earlier this month.
Hiroshi Fujimoto, a fund manager at Okasan Capital Management, said he would focus on what companies say about prospects for this year, looking for upbeat estimates similar to one on Hitachi's 2004/05 earnings by business daily Nihon Keizai on April 18.
"The report gave us a positive surprise and firms like Toshiba and Fujitsu are pretty likely to give us a similar, positive type of surprise," Fujimoto said.
A meeting of Group of Seven finance ministers and central bankers that concluded on Saturday is expected to have little impact on Japanese shares. A Japanese Finance Ministry source said there was no discussion on currencies and Japan even won praise from other G7 members for a strong economic recovery.
Traders expect the Nikkei to move between 11,800 and 12,300 this week after ending last week up 2.5 percent at 12,120.66.
It was the first close above 12,000 since April 14 and nearly 60 percent above the level a year ago, when fears of a financial crisis pulled the Nikkei down to two-decade lows. Analysts said, however, that any tendency to aggressive buying could be curbed due to worries about higher interest rates in the United States ahead of a Federal Open Market Committee (FOMC) meeting and the key monthly jobs report, both due early in May.
They are anxious that higher borrowing costs would halt foreigners' buying spree in Japanese shares. The latest exchange data showed foreigners turned net sellers of Japanese stocks in the week ended on April 16 for the first time in 10 weeks.
On Friday, US shares rose for a third straight day as strong results from Microsoft Corp gave tech shares a boost. The Dow closed 0.11 percent higher and the tech-laden Nasdaq was up 0.83 percent.
On the domestic economic data front, Japanese industrial output is seen to have risen in March, adding another evidence that an export-led recovery is on the way. A market consensus is a rise of 0.7 percent from the previous month, following a 3.8 percent fall in February.
But retail sales data which provide clues on the strength of personal consumption are expected to show a weak number, with a consensus of a 2.2 percent fall in March from a year earlier, after a 0.9 percent rise in February.
The output and retail sales data are both due on Wednesday and data on job conditions for March is due on Friday.
The Bank of Japan holds a one-day policy meeting on Wednesday. Analysts expect the central bank to keep its easy monetary policy unchanged given perceptions that deflation is likely to continue.
Analysts said a slew of solid earnings would bolster the technology sector, which investors had long avoided before a firming dollar capped an export-hurting rise in the yen in the past few weeks.
Comments
Comments are closed.