Japanese shares may remain constrained next week with investors mulling mixed signals as to the strength of recovery in the United States, dealers said Friday. In the week to April 16, the Tokyo Stock Exchange's benchmark Nikkei-225 index lost 102.16 points or 0.91 percent to 11,102.18.
The broader Topix index of all first-section shares edged down 0.55 points, or 0.06 percent, to 988.84. "There are basically two factors moving Japanese share prices - the dollar against the yen and the US stocks," said Seiichi Suzuki, strategist at Tokai Tokyo Securities, adding that the outlook remained unclear for both. "The dollar doesn't have the strength investors had expected," he said.
The yen's subsequent stronger performance over the past week has weighed on exporters who see their repatriated overseas earnings compromised as a result. The greenback fell to 92.73 yen in Tokyo Friday, easing from 93.06 yen earlier in New York, with exporters leading Japanese shares down 1.52 percent.
"US shares also lack a convincing momentum despite brisk earnings reports," said Suzuki, referring to Google's sagging stock price despite a strong financial showing. Google reported Thursday its first quarter net profit rose by more than 37 percent, better than Wall Street expectations, but its share price dropped more than five percent in after-hours trading. Investors were concerned that the firm's fierce pace of hiring signals a shift to free-spending ways that could erode future profit.
Investors "had expected good corporate earnings and have already factored this before many other accounting reports are to be released next week," said Daisuke Uno, chief market strategist at Sumitomo Mitsui Banking Corp. The Nikkei index will see resistance at 11,250 next week, Suzuki said.
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