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Japanese share prices seen under pressure next week
Fri, Sep 10, 2010
AsiaOne

TOKYO - Japanese share prices will likely be under pressure next week as a strong yen versus the dollar and euro weighs on exporters, analysts said Friday.

In the week to September 10, the headline Nikkei index gained 125.04 points, or 1.37 percent, to 9,239.17. The Topix index of all first section shares of the Tokyo Stock Exchange rose 10.02 points, or 1.22 percent, to 833.72.

On Friday, exporters enjoyed a boost as investors were encouraged by a slightly weaker yen.

The Japanese currency has been trading at a 15-year high - making Japanese exports less competitive and reducing companies' repatriated earnings - as investors have chosen the safe haven currency over the dollar and euro.

Analysts said market players will continue focusing on the volatile currency trade next week.

"The upside will likely be limited," said Hideaki Higashi, strategist at SMBC Friend Securities, expecting the index will move narrowly somewhere between 9,100 and 9,400.

Downside risks include any negative news on the euro, he said, noting fresh doubts over Europe's "stress tests" on banks had caused the single currency to lose ground this week.

"Risk aversion stemming from shaky confidence on the euro can surface any time," he said.

Daisuke Uno, chief market strategist of Sumitomo Mitsui Banking Corp., also expected Japanese share prices to be under pressure next week.

"Currency investors have been cautious about a possible double-dip recession of the US and global economy," he said.

"Eventually, stock market players will also have to be realistic. The Dow for example should be well under the 10,000 level fundamentally."

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