Tokyo stocks seen to remain weak next week

Tokyo shares are to remain weak next week on the persistent strength of the yen amid uncertainty over deadlocked US talks for raising its debt limit before a Tuesday deadline, dealers said Friday.
Kenichi Hirano, operating officer at Tachibana Securities, said there was "an 80 percent chance" that the worst case scenario - a US debt default that would send shockwaves through world markets - would be avoided. But stocks will move in a narrow range amid investor caution before any outcome, he said.
"The market is unlikely to fall sharply on domestic factors as Japanese corporate earnings released so far have been generally favourable," Hirano said, pointing to the fact that many firms are still forecasting profits for the fiscal year. "Although some companies that showed dismal results were hit with heavy selling," he added.
In the week to July 29, the Nikkei index at the Tokyo Stock Exchange slumped 2.95 percent, or 299.08 points, to 9,833.03. The Topix index of all first section shares lost 3.16 percent, or 27.44 points, to 841.37.
The stalemate in US congressional leaders' negotiations for raising the nation's debt ceiling by an August 2 deadline in order to avert default has sent the dollar lower against the yen and put pressure on global stocks.
Global markets remain on edge amid fears that a fragile economic recovery nurtured since the 2008 global financial crisis could be at risk if the United States fails to reach a deal to avert a potentially cataclysmic debt default.
The chief executives of Bank of America, Citigroup, Goldman Sachs, J. P Morgan Chase, Morgan Stanley, Wells Fargo and other top financial firms wrote in a joint letter that they hoped for a deal. "The consequences of inaction - for our economy, the already struggling job market, the financial circumstances of American businesses and families, and for America's global economic leadership - would be very grave."
Stocks "may rebound if US lawmakers manage to sort out the debt problem. But its topside would be heavy above 10,000," said Masatoshi Sato, senior strategist at Mizuho Investors Securities.
"The dollar is seen to remain softer as the US economy is relatively weak. The market is keeping an eye on upcoming US economic data," Sato said.
US ISM purchasing managers index for the manufacturing sector for July to is to be announced Monday and the nation's employment report is due out next Friday.