The idle Tokyo stock market could spend weeks searching for direction amid concerns over corporate earnings and economic prospects.

Despite the market’s positive reaction to the inauguration of the Cabinet of Prime Minister Junichiro Koizumi, when it comes to political clout, investors remain unconvinced.

Having reached the year’s high early this month, the Nikkei average has since remained mired at a depressed level.

With much of the recent uptrend in share prices running out of steam, the 225-issue Nikkei average has been languishing around 13,500, down from the 14,529.41 it hit May 7, a level unseen since mid-December.

In short, the key market gauge appears likely to remain locked within the 13,000 to 14,600 range through much of the coming weeks.

According to Nihon Keizai Shimbun’s latest tabulation, 1,391 listed companies other than financial institutions are forecasting a 0.6 percent year-on-year fall in pretax profits for the current business year to next March, a turnaround from a 37.2 percent year-on-year increase the previous year.

A government report showed early this week that industrial production fell 1.7 percent in April, after adjustment for seasonal variations, stopping short of the previous month’s level for the second straight month.

Until recently, foreign investors geared up for increased purchases of Japanese stocks, while the nation’s intricate cross-shareholding web continued unraveling.

Nonresidents’ net purchases have visibly narrowed of late, however.

They bought some 69 billion yen more than they sold in the third week of May, down 77 percent from the week-before level of 301 billion yen.

Given the ultralow interest rates, a steep fall in Tokyo share prices appears unlikely. Still, the repeated tumbles in New York stocks in recent days are keeping investors from making big moves.

Prospects for the New York market, however, may not be as dire as they appear.

Repeated interest rate cuts by the U.S. Federal Reserve and the landmark U.S. tax-cut legislation approved by Congress could presage a more stable stock market in the coming month.

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