Japanese share prices are expected to face additional selling pressure on global economic woes and may even slip to a new low for the year, dealers said on Friday. "Market sentiment is pretty weak," said Hirokazu Fujiki, a strategist at Okasan Securities. "It would be no surprise if players try to test this year's low sometime soon."
Over the week to September 5, Tokyo's benchmark Nikkei-225 index lost 860.64 points or 6.58 percent to end on Friday at 12,212.23, the lowest close since mid-March, when the index hit the year's closing low of 11,787.51.
The broader Topix index of all first section shares on the Tokyo Stock Exchange dropped 83.87 points or 6.68 percent to 1,170.84, slipping below the symbolic 1,200-point level.
"External factors, namely US stocks and US economic figures, will remain key elements for the Japanese market as well," said Kazuhiro Takahashi, a broker at SMBC Daiwa Securities.
"Under the circumstances, we have to anticipate that Japanese shares may hit another bottom," he said. On Friday, the Nikkei index lost 2.75 percent as weak retail results and data suggesting mounting job losses in the United States heightened fears on the US economic outlook.
Investors were starting to look to earnings reports from US brokerages, dealers said. "Trading is expected to be thin as players are likely to be on the sidelines ahead of financial reports by major US banks next week and the week after next," Fujiki said.
Selling pressure may intensify on exporters as the yen has surged against the dollar, dealers said, predicting the yen would advance further against the US currency.
Market players are also looking to Japan's political developments as the ruling Liberal Democratic Party is to hold an election on September 22 to replace Prime Minister Yasuo Fukuda, who announced his resignation on Monday. Front-runner Taro Aso, a conservative former foreign minister, announced his bid to become Japan's next prime minister on Friday, while six other lawmakers have signalled they may challenge him.