Japan stocks seen stable, eyes on US earnings

January 14, 2011 | 16:51

(0) user say

Japanese shares are likely to hold firm in the week ahead and may test a new eight-month high, with the market closely watching upcoming US corporate earnings, brokers said Friday.

In the week to January 14, the benchmark Nikkei index at the Tokyo Stock Exchange fell 0.40 per cent, or 42 points, to 10,499.04.

The Nikkei index closed Thursday at its highest level since May, taking a cue from rising overseas markets after a successful bond auction by Portugal eased fears that the country would become the third eurozone country to receive a bailout.

But the index fell back on Friday as investors locked in profits.

The Topix index of all first section shares added 0.42 per cent, or 3.89 points, in the week to 930.31.

"Market sentiment appears still strong as profit-taking today (Friday) was quite limited despite the recent gains," said Hirokazu Fujiki, strategist at Okasan Securities, referring to the Nikkei's 0.86 per cent decline.

"The market will start paying attention to corporate results from major companies in the United States. We won't be surprised to see the market chase another high next week," Fujiki said.

Major US financial and technology firms are scheduled to announce their quarterly earnings in the coming week.

Yosuke Shimizu, general manager at Retela Crea Securities, told Dow Jones Newswires that investors were turning their attention to earnings results from consumer computing giant Apple due Tuesday.

He said the Nikkei was likely to trade between 10,450 and 10,650 in the coming week.

Nomura Securities said in a report that "the focus is on whether economic indicators will confirm solid US economic recovery and whether corporate earnings will confirm their businesses are robust".

Upcoming US economic data include housing starts on January 19.

AFP

What the stars mean:

★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional