Cautious trading is expected on the Tokyo stock market next week amid uncertainty about whether a recent recovery can be sustained, analysts said on Friday. "It is too early to say Tokyo stocks have finally returned to an upward trend," said Hirokazu Fujiki, a strategist at Okasan Securities.
Over the week to August 29, Tokyo's benchmark Nikkei-225 index jumped 406.83 points or 3.21 percent to end Friday at 13,072.87, the highest close since August 18, on unexpectedly strong US economic growth.
The broader Topix index of all first section shares on the Tokyo Stock Exchange gained 38.29 points or 3.15 percent to 1,254.71. "It's true that players were relieved (about the US figures) but that does not guarantee any future recovery," Fujiki said.
"Also, key economic figures and monetary policy (decisions) will be announced next week," he said. "I wouldn't be surprised to see players cautiously stay on the sidelines so as not to take unnecessary risks."
The European Central Bank will hold a monetary policy meeting on Thursday with its president Jean-Claude Trichet scheduled to hold a news conference, while the United States will announce August employment figures on Friday.
"Players are gradually shifting from their very negative stance to neutral positions as there are some positive signs such as the GDP figures," said Masatoshi Sato, strategist at Mizuho Investors Securities.
But it is still uncertain if the US economy can continue to show signs of resilience, Sato said. "Shares are likely to be rangebound again next week in thin trading as players are likely to remain cautious," Sato added.
Okasan's Fujiki, meanwhile, forecast that the impact of Japan's new stimulus package on share prices would be limited as it was within expectations.
On Friday, Japan's government announced a plan worth 11.7 trillion yen (107 billion dollars) to bolster the economy. But lending-related measures account for most of that, with fresh spending expected to be about 2.0 trillion yen.