Japan's stock market may suffer a bout of the year-end blues with many foreign investors expected to take a break for the holiday period, analysts said on Friday. A series of economic indicators to be released in the United States and Japan is expected to be the main focus, they said.
"Japanese investors have been selling and selling. Once foreign investors start leaving the market for Christmas, selling pressure may accelerate," said Seiichi Suzuki, market analyst at Tokai Tokyo Securities.
Over the week to December 18, the Nikkei-225 index of the Tokyo Stock Exchange managed a rise of 34.18 points, or 0.34 percent, to 10,142.05. The broader Topix index of all first-section shares climbed 5.02 points, or 0.56 percent, to 893.59. But recent solid economic data, particularly from the United States, was largely offset by worries including Dubai's debt crisis and credit rating downgrades of Greece's sovereign debt, Suzuki said.
The Bank of Japan's quarterly Tankan survey showed improved business confidence, but investors sold stocks on signs that companies are planning deep cuts to business investment.
"If you were to take a bullish view, people may say the market is very top heavy despite good news. Pessimists might say the market has been very well supported despite the negative factors," Suzuki said.
Japan's November trade statistics, to be released on Monday, may show a continued recovery in exports to Asia, brightening investor sentiment, said Tsuyoshi Nomaguchi, senior strategist at Daiwa Securities.
US durable goods orders, housing data and consumer spending could also bring cheers, he said in a note to clients.
But a recent rebound in the value of the dollar could hit sentiment on the US and Tokyo markets, he said, because investors had previously bought US shares in the hope that the currency would stay weak.
"It's possible, in the short-term, that the higher dollar could weaken US shares and lead to falls in Japanese stocks," he said. The Tokyo market will be closed on Wednesday of next week for a national holiday to mark the emperor's birthday.