TOKYO: Tokyo investors will look to key US data next week, with sentiment also hinging on the performance of Japanese firms which have yet to release their half-year earnings, analysts said.
A turndown in the benchmark Nikkei over the past two sessions could stoke bargain hunting, said Hiroichi Nishi, SMBC Nikko Securities general manager of equities.
“As company earnings have been relatively good so far, the market will be provided with a solid bottom,” he said.
“On the other hand, the upside would be capped with caution as investors await US jobs and other important data next week,” Nishi added.
Figures due next week include quarterly US economic growth data and October jobs figures.
Investors would be looking to the data for further clues as to when the US Federal Reserve would start scaling back its massive stimulus drive, after it held steady on the scheme this week.
Many observers thought the Fed would not start reeling the program in until March, but they now “speculate that the possibility of taper by the end of the year is not zero,” Nishi said.
“There is growing uncertainty over the US monetary policy,” he added.
Nomura Securities said in a weekly note that markets expected growth in US job creation to have slowed in October, because of the two-week government shutdown and its lingering impact on the wider economy.
“If [jobs data]turn out to be stronger than expected, it would ease concerns over the scenario that the wrangling over fiscal policy would worsen consumer and corporate sentiment,” Nomura said.
Among major companies, Toyota will release earnings on Wednesday next week.
The benchmark Nikkei 225 index shed 0.88 percent, or 126.37 points to 14,201.57 on Friday, but it gained 0.80 percent, or 113.38 points over the past week.
The Topix index of all first-section shares fell 0.94 percent, or 11.23 points to 1,183.03. It was up 0.40 percent, or 4.75 points over the week.