The Tokyo stock market is likely to be top-heavy next week, with a lack of major market-moving factors keeping the benchmark Nikkei average from rising above 30,000.
This week, the Nikkei average of 225 first-section issues on the Tokyo Stock Exchange climbed 740.88 points, or 2.57%, to end at 29,520.07 on Friday.
The market enjoyed a bull run on positive developments regarding U.S. President Joe Biden’s $1.9 trillion coronavirus stimulus package and rosy earnings announcements by Japanese firms in the first half of the week, but the Nikkei lost steam after a national holiday on Thursday, due to concerns over market overheating.
Next week, the Nikkei is expected to move mainly between 29,000 and 30,000, analysts and brokers said.
Maki Sawada, strategist at Nomura Securities Co., said economic indicators to be released domestically and overseas may “give further reassurance to investors that the economy is on the recovery path.”
But at the same time Sawada noted that such reassurance would not be enough for the Nikkei to breach the major psychological threshold of 30,000.
“Even if progress with Biden’s rescue package is made, the 30,000 line cannot be broken because large U.S. fiscal spending has already been priced in,” she added.
Masayuki Otani, chief market analyst at Securities Japan Inc., said upcoming domestic earnings reports are expected to continue to underpin the market by showing stable business recoveries from the coronavirus crisis.
“But a market rise would be limited by concerns over price overheating,” he went on to say.
Hirohumi Yamamoto, strategist at Toyo Securities Co., warned that the Nikkei may briefly dip below 29,000 due to “potential risks,” including any negative news about Japan’s coronavirus vaccine supply and Biden’s relief plan.
“Especially because market expectations are so high for the U.S. stimulus package, a potential delay in its passage through Congress may lead to a sell-off, albeit temporarily,” he said.
In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.