Jiji Press TOKYO (Jiji Press) — Tokyo stocks are likely to stay on a relatively firm note although some correction is expected following their recent surge, analysts say.
Last week, the benchmark 225-issue Nikkei average rose 142.30 points, or 0.63 percent, to end Friday at 22,681.42 on the Tokyo Stock Exchange.
The Nikkei hit the highest closing level in nearly 26 years on Tuesday, thanks to hefty purchases supported by a series of announcements of strong earnings by Japanese companies.
After the key price gauge jumped to retake 23,000 for the first time also in some 26 years on an intraday basis on Thursday, however, stocks fell sharply, due chiefly to profit-taking.
Analysts say the Nikkei will likely move between 21,800 and 23,300 this week.
Ryuta Otsuka, strategist at the investment information department of Toyo Securities Co., said that the market will “maintain its strength” this week.
There may be a brief pullback due to a possible further downturn on Wall Street stemming from uncertainties over the course of U.S. tax reform and a subsequent yen rise against the dollar, Otsuka said.
“But the Tokyo market’s downside would be supported by bargain hunting,” Otsuka added.
“The Nikkei could fall below 22,000” if the dollar drops below ¥113, affected by U.S. stocks’ possible retreat on the delay in the much-awaited tax cut plan in the United States, said Yutaka Miura, senior technical analyst at Mizuho Securities Co.
Wall Street is “unlikely to lose [further] ground as the U.S. market already digested” sales induced by worries over the delay in the tax cut program on Thursday, said Hideyuki Ishiguro, senior strategist at Daiwa Securities Co.
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