Tokyo investors will be looking to U.S. and Japanese central bank meetings this week as well as a series of earnings from firms including Panasonic and Japan Airlines.
The Federal Reserve kicks off a two-day meeting Tuesday, with markets looking for hints from the U.S. central bank about the state of the world's biggest economy, while investors will also be looking to the Bank of Japan's meeting on Wednesday for any expansion of its massive stimulus scheme.
Market players will take clues from the policy-setting U.S. Federal Open Market Committee (FOMC), with high expectations that policymakers will reiterate their commitment to keep interest rates low, Daiwa Securities said.
"For the immediate future, we expect the Goldilocks market will continue, where a low interest rate and economic recovery hopes co-exist," it added.
On Friday, the Nikkei 225 added 0.17%, or 24.27 points, to finish at 14,429.26, with the benchmark index down 0.60% over the week. The broader Topix index of all first-section shares climbed 0.44% Friday to 1,169.99, but it was down 0.29% on the week.
The market lacked major catalysts leading up to a holiday-shortened week, with Japanese financial markets closed on Tuesday.
The bourse had opened lower Friday after Japan and the United States failed to break a deadlock in talks over a Pacific-wide trade deal despite intense negotiations leading up to a visit by US President Barack Obama.
Earlier in the day, government inflation data showed prices rose 1.3% in March from a year earlier, the same rate since December, as Tokyo works to conquer years of deflation which have curbed growth in the world's third-largest economy.
The figures "do not inspire much hope that the Bank of Japan will engage in more monetary easing any time soon", said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
That, in turn, could hurt stocks, dealers said.
This week, investors will also be looking at fresh Japanese data, including department store sales, for any sign that a consumption tax rise on April 1 -- Japan's first in 17 years -- was taking a toll on the wider economy, Daiwa Securities said.
© (c) 2014 AFP
7 Comments
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Wyandotte Nation
Improving the economy starts in the building sector first. Construct affordable housing, multi-family units. That will help to get things started again...
John Galt
Wyandotte Nation, housing bubbles don't inflate well when there isn't a stronger production/export dynamo. Irelands real estate bubble collapse comes to mind.
JeffLee
Ireland's rise and then drop in housing prices per say wasn't the problem: Ireland's real crisis was a financial crisis caused by the banks and shadow banks. Same old story: lightly regulated banks (that ignored Basel Core Principles, etc) got greedy and thus overexposed and ended up with massive liabilities to assets. They melted down, drying up financing for everyone, and dragged down the entire economy in the process. The taxpayers were then forced to save their sorry asses.
China, for instance, has long had an overheated housing market. But there's no financial crisis there, because the banks are owned and controlled by the gov't.
sfjp330
Japan is another matter. Japan’s bond market has investors fleeing due to a 2% inflation target almost guaranteeing them large losses and a central bank intent on keeping yields low to prevent interest being paid on government debt spiralling out of control. Investors are starting to realize that the government may not win this battle. If the Bank of Japan's efforts succeed, rising inflation will eventually lead to rising bond yields and interest rates, which will make the Japanese economy even more difficult.
John Galt
Jeff, yes, Ireland's real estate burst was an offshoot of their banking debacle, but I was addressing the false premise that wyandotte nation posited. But thanks for indirectly supporting my point. I owe you a beer.
JeffLee
@John Galt
wyandotte's idea is a good one: Japan's housing industry needs serious reform, and the moves toward this goal would provide jobs. However, to avoid financial risk, the development would need to be financed by either gov't-run banks (like China's) or highly regulated ones, like Canada's.
John Galt
Jeff, how many housing boom-bust cycles will it take to learn that lesson about broken windows?