Japanese share prices are likely to remain under pressure next week amid worries about corporate earnings, the health of the US economy and possible future tax rises, analysts said on Friday.
Results from some of Japan's top electronics makers and banks, which are feeling the pain from factors such as the stronger yen, soft demand and the US financial crisis, disappointed investors this week.
Next week more leading companies including Toyota and Japan Airlines are set to release first-quarter results, with investors afraid of more gloom. "We have no positive factors for the market," said Daisuke Uno, chief market strategist at Sumitomo Mitsui Banking Corp. "Good corporate performances were the only good news at home, but we don't have that any more."
The health of the US economy is likely to be in focus at the start of next week as investors react to weekly US jobs data that was due late Friday. They will also mull the results of a cabinet reshuffle by Prime Minister Yasuo Fukuda, who was reportedly set to tap new economic ministers seen as favouring a rise in the sales tax to rebuild debt-ridden public finances.
"The market will not welcome the choice of those who will likely pursue a tax hike when the economy remains gloomy," Uno said. "It won't take long for share prices to dive below the 13,000 level." Over the week to August 1, Tokyo's benchmark Nikkei-225 index lost 240.17 points or 1.80 percent to 13,094.59.
The broader Topix index of all first section shares on the Tokyo Stock Exchange slid 25.35 points or 1.95 percent to 1,272.93. Masatoshi Sato, a strategist at Mizuho Investers Securities, said the Tokyo market was being hit by the unclear direction of the global economy. "Investors are well aware that the economy at home is sagging," he said. "I think share prices will likely be lower next week, pushed down by dismal sentiment about the world economy."
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