The Tokyo stock market is seen trading on a weak note this week as investors, already cautious about high oil prices and the global economic outlook, await the Bank of Japan's "tankan" corporate sentiment survey.
Market players will also be eager to see industrial production figures for more clues on Japan's economic and corporate health.
Next Friday's meeting of Group of Seven (G7) finance ministers is also in focus, with investors keeping a close eye on news related to China after it was invited to attend the meeting as part of efforts to draw it into talks on global issues, a recognition of its growing economic clout.
Some analysts think the Tokyo market's benchmark Nikkei average could fall as low as 10,500 if industrial output figures on Thursday or the tankan on Friday fan investors' worries about the domestic economic outlook and higher oil prices keep a lid on US stocks.
But even so, selective small-cap stocks and those with bright earnings prospects could draw buying as some investors, especially individual players, are still hungry for such stocks. Concerns that the market's recent sharp losses have been overdone could also ignite bargain hunting.
Traders expect the Nikkei to trade between 10,500 and 11,200 this week.
On Friday, it fell for a sixth straight session to close at 10,895.16, its lowest close since August 20 and bringing the week's total loss to 1.69 percent.
Japanese markets were closed last Monday and Thursday for national holidays.
With only four more trading days left until September 30, the end of Japan's fiscal first half, the Nikkei has lost 820 points or seven percent so far since April 1, the first day of this business year, hurt by higher oil prices, geopolitical concerns and uncertainty over the economic outlook both at home and overseas.
That compares with a 14.6 percent jump in the Nikkei in the six months to March 31 this year, and a gain of 28 percent during the six months from April 1 to September 30 last year.
"Market sentiment is a mixture of expectations and anxiety. Some say foreign players are still interested in buying stocks on dips and corporate earnings aren't that bad. But at the same time, macroeconomic worries are getting bigger and bigger," said Okasan Securities' senior investment strategist Tetsuya Ishijima.
"People are also unsure about the future trend in oil prices and what will happen in the US presidential election. The first US presidential debate (on Thursday) and its impact on public opinion and financial markets also need to be watched."
In New York on Friday, the Dow Jones Industrial average added 0.08 percent to 10,047.24 and the Nasdaq Composite Index lost 0.37 percent to 1,879.48.
NYMEX crude oil futures ended at a record settlement high of $48.88 a barrel. The record prompt crude price of $49.40 was set on August 20.
The BOJ's quarterly tankan is expected to show an improvement in sentiment among Japanese manufacturers and non-manufacturers, but confidence may have hit a peak, according to economists polled by Reuters.
Industrial production is expected to have risen 0.5 percent in August from July, but some economists believe an inventory build-up in some sectors such as electronics could slow output in the months ahead.
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