Japanese shares are expected to be range-bound in sensitive trading next week as market participants remain jittery over the economy and the fate of troubled US auto giants, analysts said on Friday. "Trading is expected to be in a tight range next week as players will continue closely watching news from the United States," said Yumi Nishimura, an analyst at Daiwa Securities SMBC.
"While market sentiment is hardly positive, players are seeking bargains as country have begun carrying out own fiscal measures," Nishimura said. Japan said Wednesday it had started work on an emergency plan to halt a plunge in share prices that Tokyo fears could deepen a downturn in Asia's biggest economy.
The market is looking to key economic indicators to be released by the US government, including a revision of the gross domestic product for the fourth quarter and jobless figures.
The market is also waiting for a policy meeting of the European Central Bank on Thursday amid speculation that it would lower its key interest rate by half a percentage point beyond its current record low level to 1.5 percent. Hirokazu Fujiki, an analyst at Okasan Securities, said the Nikkei may fall below a psychologically important 7,000 yen level "if we receive more bad news on General Motors".
The struggling auto giant on Thursday went 9.6 billion dollar into the red in the fourth quarter, pushing its 2008 loss to 30.9 billion dollars. The Treasury Department has until March 31 to decide whether the massive restructuring plans submitted by GM and Chrysler are enough to ensure the long-term viability for the two auto icons.
The recent decline in the yen against the dollar is expected to support shares in Japanese exporters, although its impact appears somewhat limited, Okasan's Fujiki said.
During the week, the yen fell to a three-month low against the dollar as concerns grew that the Japanese currency is no longer a safe bet amid the economic crisis, dealers said. The Tokyo Stock Exchange's benchmark Nikkei-225 index ended the week at 7,568.42, up 152.04 yen or 2.05 percent from a week earlier, after dropping 4.67 percent the previous week.
On Tuesday, the Nikkei briefly dipped below last October's closing low of 7,162.90, which was the weakest point since 1982, but rallied later as a weaker yen provided some comfort to nervous investors. The broader Topix index of all first-section shares rose 17.18 points or 2.32 percent to 756.71.