Japanese shares are likely to remain under pressure next week as concerns about the global economic outlook continue weighing on the market, analysts said Friday. After a five-day losing streak, Japanese stocks rebounded Friday, as investors picked up bargains and Wall Street provided a strong cue.
In the week to July 23, the Tokyo Stock Exchange's Nikkei index gained 0.24 percent, or 22.6 points, to reach 9,430.96. The broader Topix index of first-section shares rose 0.08 percent, or 0.71 points, to 841.29. But analysts said the rebound might not last long on the Tokyo market.
"Extreme concerns about the US economy have subsided for now, but it's too early to say Japanese stocks have entered a genuine upward trend," Mizuho Investors Securities senior strategist Masatoshi Sato told Dow Jones Newswires.
The London-based Committee of European Banking Supervisors was to publish later Friday the results of "stress tests" by national regulators on 91 EU institutions representing 65 percent of the bloc's banking sector. While some investors bet the tests will show the European banking system is largely in good health, others have questioned whether the tests are stringent enough.
Daisuke Uno, chief market strategist at Sumitomo Mitsui Banking Corp, said that regarding the US economy, "market players may start questioning if its economic situation has been overestimated." He pointed to data on existing US home sales, which fell for the second straight month in June, reflecting weakness in a sector that was at the epicentre of the financial crisis.
"US home sales fell, but the market interpreted it positively because it was not as bad as expected," Uno said. "Considering that, I don't think the upward trend on Wall Street will be sustained."
In other negative data, the US Labour Department reported Thursday that new claims for US unemployment benefits had risen more than expected last week, after two weeks of sharp declines linked largely to seasonal lay-offs. "The continued uncertainty about the US and European economies will weigh on Japanese share prices next week," Uno said, predicting the Nikkei would stay in the 9,000-9,500 range.