GDP figures, BoJ meeting in focus for Tokyo investors

16 Nov, 2015

Investors will focus on the release of Japan's gross domestic product (GDP) figures and a Bank of Japan (BoJ) monetary policy meeting next week as Japanese shares sit at 12-week highs.
Japan is to announce its July-September GDP figures on Monday amid growing expectations that the world's third largest economy could slip into a technical recession by suffering two consecutive quarters of contraction.
"The market is paying close attention to GDP figures next week," said Shinichi Yamamoto, broker at Okasan Securities.
"Considering the current positive market sentiment, however, I think the market is likely to digest and overcome GDP figures even if they are weak," Yamamoto said.
The market will also look to a two-day policy meeting by the Japanese central bank, which will end on Thursday. Last month, the BoJ held fire on expanding its massive stimulus programme despite the recent weak data.
BoJ monetary easing is a cornerstone of Prime Minister Shinzo Abe's growth blitz, dubbed "Abenomics", which has faltered after intially setting off a stock market rally and weakening the yen, giving a lift to corporate profits.
On Friday, Tokyo stocks fell 0.51 percent following a broad sell-off on Wall Street after recent rallies. The Nikkei 225 index at the Tokyo Stock Exchange lost 100.86 points to close at 19,596.91, easing from a 12-week high. The benchmark index still managed a gain of 1.72 percent over the five days.
The Topix index of all first-section shares slipped 0.49 percent, or 7.74 points, to 1,585.83. Over the week, the broader index gained 1.42 percent. Selling pressure in Tokyo came after European and US shares were driven down Thursday by a grim Rolls-Royce profit warning and another fall in crude prices that hit oil companies.
Also weighing on the Japanese market was the yen's strength against the dollar at 122.61, maintaining ground gained overnight in New York where it fetched 122.60 yen. The US currency has remained under pressure as Federal Reserve officials emphasised the need for a cautious approach to monetary policy, even as they reiterated their preference for a rate rise this year.
The appreciating yen, which makes Japanese products more expensive overseas, was seen pulling down exporters.
More broadly, investors continued to focus on the possibility of the Federal Reserve raising interest rates next month.
Several Fed officials, including chair Janet Yellen, spoke publicly Thursday, reiterating that December was possible for a rate hike - as long as it is supported by economic data.
The Fed "wants to see the impact on the job markets and business growth after a rate rise. It won't pick up the pace drastically," Nobuyuki Fujimoto, a senior market analyst at SBI Securities Co, told Bloomberg News.

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