TOKYO: Tokyo investors will keeping an eye on the Bank of Japan’s (BoJ) quarterly business sentiment survey and Chinese economic figures next week, analysts say, after the Nikkei index hit a month high on Friday.
The Tokyo Stock Exchange has seen weeks of big moves, with the benchmark Nikkei at one stage down 20 percent from its five-year high in May.
But the Nikkei rose 3.38 percent, or 447.19 points, to 13,677.32 in the week to June 28, on top of a 4.28-percent gain the previous week.
The broader Topix index of all first-section shares gained 3.13 percent, or 34.44 points, to 1,133.84, over the past week.
“Players are regaining confidence as the Nikkei is showing signs of a recovery,” said Toshikazu Horiuchi, a broker with IwaiCosmo Securities.
“But they are still concerned about the China risk. Players will try to confirm if the market has hit bottom while monitoring the impact of the China situation,” he added.
Fears of a Chinese banking liquidity crisis shocked markets this week, as investors fretted over the health of the world’s no. 2 economy.
However, those worries subsided on Friday after the People’s Bank of China said that it would provide support to credit-starved institutions.
On Monday, the BoJ will release its quarterly Tankan business sentiment survey, giving markets a chance to gauge the impact on the economy of the huge spending policies laid down by Japanese premier Shinzo Abe.
Government data on Friday showed Japanese factory output in May rose by a better-than-expected 2 percent month-on-month, as the export sector logged rises on the back of a sharp decline in the yen.
Investors will also be watching out for Chinese manufacturing data and forex trading, with a weakening yen again providing support to equities.
But Tachibana Securities market analyst Kenichi Hirano warned: “Worries over Chinese economic growth and the integrity of its financial system are far from over.”
“Japan shares are increasingly sensitive to data points, and next week’s China manufacturing figures and Japan quarterly Tankan survey results may prove pivotal in determining short-term market trajectory,” he added.