Japanese share prices are expected to stay flat in this week amid caution over further corporate profit warnings and ahead of a G7 meeting of rich countries which may address foreign exchange rate issues, analysts said Friday. The market would also closely monitor the outcome of the elections in Iraq and a meeting of Organisation of Petroleum Exporting Countries (OPEC) oil ministers over the weekend.
The US Federal Reserve has been slated to announce its decision on interest rates Wednesday after a two-day policy meeting, and finance ministers and central bank governors from the Group of Seven (G7) major nations will meet February 4-5.
Speculation that senior Chinese officials might discuss plans to move the yuan to a floating rate system from its current fixed dollar peg regime at the G7 meeting has fuelled volatile trading in the dollar.
Expectations of a revalued Chinese currency have prompted dollar selling for yen, raising concerns that a weaker US unit would hurt Japanese exporter earnings.
"The huge US deficits and concerns among EU leaders about a strong euro might lead to a stronger yen," said Fumiaki Nakanishi, market research head at SMBC Friend Securities.
"Investors will refrain from buying until after a barrage of events," said Toshio Sumitani, senior strategist at Tokai Tokyo Research Center.
However, poor corporate results and downward forecast revisions were unlikely to push the local stock market sharply lower because these concerns have been largely priced in, said Sumitani.
Consumer electronics giant Sony Corp high-tech firms NEC Corp Fujitsu Ltd and Kyocera Corp have all downgraded their profit forecasts for the year to March 2005.
In the coming week, both Sumitani and Nakanishi forecast the benchmark Nikkei-225 index would move between 11,100 and 11,500.
In the week to January 28, the index rose only 82.21 points or 0.73 percent to 11,320.58. The broader TOPIX index of all First Section shares gained 13.52 points or 1.19 percent to 1,145.70.
For the week just ended, average daily volume on the main board of the stock exchange was 1.48 billion shares, from 1.60 billion shares the previous week.
Average daily trade by value was 1.11 trillion yen (10.75 billion dollars), from 1.16 trillion yen a week earlier.