Japanese shares may come under pressure next week if US payrolls data turn out to be weaker than expected amid jitters over the health of the world's largest economy, brokers said Friday. In the week to June 3, the benchmark Nikkei index at the Tokyo Stock Exchange lost 0.31 percent, or 29.73 points, to 9,492.21. The Topix index of all first section shares fell 1.01 percent, or 8.33 points, to 816.57.
The market was cautiously awaiting a US employment report due later Friday, as concerns grow over the US economy in the wake of grim manufacturing and other indicators released this week, brokers said. "If non-farm payrolls numbers come out weak and spark a sell-off in US stocks, the market is likely to stay under pressure for a while," said Kenichi Hirano, general manager at Tachibana Securities.
Ongoing political uncertainty in Japan also weighed on Tokyo stocks this week as embattled centre-left Prime Minister Naoto Kan survived an opposition no-confidence vote in parliament on Thursday. Kan managed to appease some rebel members of his own party who had threatened to support the motion after pledging to step down once recovery from the March 11 quake disaster takes hold.
But he faced a backlash after suggesting he wants to stay until next year. Political paralysis under Kan's stewardship is likely to be a negative factor for Japanese stocks in coming months, Masatoshi Sato, senior strategist at Mizuho Investors Securities, told Dow Jones Newswires.
Most policy measures, including free trade agreements, are likely to stall in the opposition-controlled upper house, Sato said. "The Kan administration will become a lame-duck government" faced with opposition parties and internal discord, he added.
Meanwhile, Hirano said the impact would be "neutral" as investor expectation for Japanese politics are not high anyway and because the political confusion was unlikely to trigger heavy selling.