Tokyo share prices are likely to rebound next week as Barack Obama's inauguration as US president reignites hopes for an economic recovery, dealers said Friday. "The next week will see a rebound in stock prices largely because of resurgent expectations about incoming US president Barack Obama's policies," said Seiichi Suzuki, a market analyst at Tokai Tokyo Securities.
"After Obama's inauguration on Tuesday, US shares will probably rise on the new president's high popularity, which will influence Japanese stocks," he said, predicting the Nikkei would move in a range of 8,100-8,500 points.
Optimism at the start of the year over Obama's economic stimulus plan took a back seat this week following a raft of gloomy economic and corporate news. The Nikkei ended Friday at 8,230.15, down 606.65 points, or 6.87 percent, from a week earlier. The broader Topix index of all first-section shares fell 37.13 points, or 4.34 percent, to 817.89.
But the market rallied on Friday from a six-week low as optimism about the US spending plans returned. "The market also seems to have factored in some of the bad earnings reports" for the financial year to March, said Yukio Takahashi, strategist at Shinko Securities. But trade will remain cautious ahead of earnings reports from US firms next week and those of Japanese firms the week after, he added.
Several Japanese companies have issued profit warnings recently and local newspapers have also carried numerous reports about weak earnings or losses.
Dealers will pay attention to the Bank of Japan's policy board meeting on Wednesday and Thursday. "The focus of the BoJ meeting is whether it will announce new measures to support the financial market," Takahashi said.
The BoJ is reportedly considering spending two trillion yen (22 billion dollars) to buy commercial paper, a type of corporate debt, as it seeks new ways to ease a credit crunch.
The Nikkei business daily reported Friday the Bank will next week agree to start buying commercial paper from banks as soon as this month and continue the scheme until April.