Japanese shares are expected to be rangebound in cautious trading next week with the market looking to details of a US financial rescue plan, analysts said Friday. They also said the market would closely watch progress in Congress of another stimulus plan worth more than 900 billion dollars that is hoped will to revive the plunging economy.
"Players are paying close attention to the financial reform scheme," which is expected to be announced by Treasury Secretary Timothy Geithner on Monday, said Hirokazu Fujiki, an analyst at Okasan Securities. Geithner and his staff have been working on new measures to support the financial system with the release of the second half of the 700-billion-dollar Troubled Asset Relief Program crafted by his predecessor, Henry Paulson.
The rescue plan comes as financial chiefs of the Group of Seven industrialised nations are set to hold talks in Rome next weekend amid the global economic crisis.
"Players also hope to see an early passage of a stimulus plan" worth more than 900 billion dollars to revive the plunging economy, Fujiki said. "If there is positive news from the United States, buying support is expected to increase in Tokyo," he added.
The Nikkei-225 index of the Tokyo Stock Exchange ended Friday at 8,076.62, up 82.57 points or 1.03 percent from a week earlier. But the broader Topix index of all first-section shares edged down 3.19 points or 0.40 percent to 790.84.
"Buying support is unlikely to increase, but strong selling pressure is also unlikely to emerge as expectations of economic measures taken by each country are still high," said Yumi Nishimura, an analyst at Daiwa Securities SMBC.
Nishimura warned that a stronger yen could also hurt market sentiment after a slew of weak earnings results from Japanese companies. A weaker yen benefits Japanese exports. Toyota Motor warned this week it expects an annual operating loss of 4.9 billion dollars, its first ever, while Panasonic said it was cutting 15,000 jobs and closing dozens of plants world-wide.
"The market has already factored in the loss-mounting corporate results for the current fiscal year," which will end in March, Nishimura said. "The focus has already shifted to their performance in the next fiscal year."
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