Japanese shares could fall this week as investors continue to worry about future earnings at top companies even if first quarter results that are starting to roll in are as good as expected.
The focus will be on tech firms including Sony Corp, Panasonic brand maker Matsushita Electric Industrial Co Ltd, electronics conglomerate Toshiba Corp and top mobile phone operator NTT DoCoMo Inc, all of which release April-June earnings this week.
Market sentiment deteriorated last week after a slew of disappointing profit forecasts from US companies, such as software giant Microsoft Corp, which came on the heels of bearish analyst reports on the global high-tech industry.
Tokyo's Nikkei average hit a seven-week closing low to reach 11,187 points at the close on Friday and still looks vulnerable, analysts said.
"The market is now fragile to any negative news," said Takashi Miyazaki, senior strategist at UFJ Partners Asset Management. "I wouldn't be surprised if the Nikkei breaks below 11,000."
Traders said the Nikkei would move between 10,700 and 11,500 points this week after falling 2.17 percent last week.
The Tokyo market will remain jittery about high oil prices and the weak performance of US stock markets, where the blue chip Dow Jones Industrials ended below the 10,000 level for the first time in two months.
In Japan, data this week are expected to show a drop in consumption and industrial production for June although economists have said it would be premature to conclude that Japan's economic recovery is coming to an end.
Underscoring the market's bearish mood, some company executives were cautious about business prospects at a high-profile business forum at the end of last week.
Analysts said the Nikkei average was technically supported around 11,000 points. Its 200-day moving average, often considered as a support point, stood at 11,024 as of Friday's close.
Analysts said the Tokyo market could rebound if there were more signs of strength in the US economy, Japan's main export market, following last week's moderately upbeat comments by Federal Reserve Chairman Alan Greenspan. Analysts also said foreign investors were unlikely to unload Japanese shareholdings, given the better returns they have found in Tokyo this year compared to other major stock markets.
The Nikkei is up nearly 5 percent so far in 2004 while the Dow is down more than 4 percent and the Nasdaq down 7 percent.
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