After a rollercoaster week on global financial markets, Japanese investors will take a cautious stance and seek to trade in a tight range after the opening bell rings next week, brokers said. In the week to August 12, the Nikkei index on the Tokyo Stock Exchange slumped 3.61 percent or 336.16 points to 8,963.72. The Topix index of all first section shares lost 4.09 percent or 32.77 points to 768.19.
"Trading is expected to remain cautious next week following the series of volatile trading sessions around the world," said Hirokazu Fujiki, strategist at Okasan Securities.
"It's hard to take positions in the current uncertain market environment."
The volatility in US stocks will likely continue through next week and until Federal Reserve Chairman Ben Bernanke gives a highly anticipated speech on August 26, brokers said.
The global turmoil started after Standard & Poor's downgraded US debt a week ago. Concerns have also grown about the European debt crisis.
Last Monday, the G7 economic powers - Britain, Canada, France, Germany, Japan, Italy and the United States - said in a joint statement that they would "take all necessary measures to promote stability".
Instead markets fell sharply for much of the week in Asia, Europe and on Wall Street, before US markets rebounded Thursday and many bourses elsewhere returned to relative stability.
Next week Japanese traders will also again pay close attention to the strong yen, which stood at 76.77 to the dollar in Tokyo afternoon trade on Friday, compared with 76.88 in New York late Thursday.
The strength of the yen - considered by many a safe-haven currency in turbulent times - hurts Japanese exporters by making their products more expensive abroad and reducing their repatriated overseas earnings.
Japan intervened on forex markets last week, selling yen and buying dollars, and has signalled that it stands ready to do so again.
"If the yen stays at this level for a long period, it will considerably erode earnings of Japanese companies operating overseas," Fujiki said.
The market will also look to Japanese GDP figures for the April-June quarter that are scheduled to be announced on Monday.
Analysts expect the data to say that the economy shrank by an annualised 2.6 percent due to the March 11 disaster. Most observers expect a rebound in the second half of the year, fuelled by reconstruction work.