Japanese shares soared during the first trading week of 2011 and investors are hungry for further gains in the weeks to come amid growing expectations of US economic recovery, analysts said Friday. The Nikkei index at the Tokyo Stock Exchange rose 3.05 percent to 10,541.04 in the four-day trading week to January 7, a new eight-month high.
The Topix index of all first section shares surged 3.07 percent to 926.42. During the week, strong economic data fuelled hopes of a steady US recovery and boosted Wall Street shares, also taking Japanese shares higher.
A firmer dollar - the greenback stood at 83.57 yen on Friday evening - also drove up Japanese stocks as a weaker yen makes Japanese exports more competitive abroad.
Nomura Securities said it believed the Nikkei could rise to 12,000 by the end of 2011. Daiwa Securities also said it expected Japanese stocks to rise further on expectations that Japanese corporate earnings will steadily improve - assuming the yen remains stable against the dollar and euro.
During the next week, the Japanese market will take cues from US jobs data as well as earnings announcements from major American firms, including Alcoa and Intel.
Major US data, including production, consumer sentiment and retail sales, should set the tone for global markets, as should Japanese machinery orders data, Daiwa Securities said in a note to clients.
"We expect the data to further heighten hopes for US economic recovery," it said. However a series of bond sales by European nations scheduled next week will pose risks and could rekindle European sovereign debt concerns, Daiwa added.
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