Japanese share prices could set new highs next week in tandem with a stronger Wall Street if data eases worries over the US economic slowdown although North Korea poses a wildcard, analysts said on Friday.
Over the week to October 6, the Tokyo Stock Exchange's benchmark Nikkei-225 index advanced 308.48 points or 1.91 percent to 16,436.06. The broader TOPIX index of all first-section stocks rose 23.48 points or 1.46 percent to 1,634.21.
After public holidays in Japan and the United States on Monday, a slew of US economic news is due later in the week including the Federal Reserve's "Beige Book" economic report and minutes from its September monetary policy meeting.
"Investors will seek confirmation that the economy is making a soft landing and with the New York Dow Jones at a historic high, the Japanese market will also perform well," said SMBC Friend Securities analyst Fumiaki Nakanishi.
The Nikkei index struck at a near five-month closing high of 16,449.33 points on Thursday after Wall Street's Dow Jones index hit record highs.
Nakanishi said the Nikkei index could reach the 16,800.0 points level next week. But some other market watchers were more cautious, with Tokai Tokyo Research Centre chief strategist Hiroyuki Nakai predicting shares would take a breather early next week as the market makes a slight correction.
Investors here will be waiting anxiously for Japan's machinery order data on Tuesday which are seen as a leading indicator of capital spending and tend to have a strong influence on the market.
The market expects Japanese core private-sector machinery orders to have risen by about 11.5 percent month-on-month in August after July's slump of 16.7 percent.
"We expect a large bounce back in core machinery orders in August in both manufacturing and non-manufacturing industries," predicted Takehiro Sato, economist at Morgan Stanley Japan Securities.
One uncertainty hanging over the market is North Korea's announcement that it plans to conduct its first atom bomb test.
SMBC Friend Securities' Nakanishi noted that with the market closed until Tuesday if the test did come this weekend as some reports suggest then it would have no immediate impact and investors would have time to digest the news.
"North Korea has already made similar statements in the past without having a large impact on the market," he added.
He said any warming of ties between Japan and China as Prime Minister Shinzo Abe heads to Beijing this weekend would be taken positively by investors.
Investors will also be on alert next week for any fresh troubles at Sony after the electronics giant saw its shares slide by 290 or 6.07 percent over the week to 4,490 as recalls of its defective batteries widened.
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