Investors are bracing for profit-taking in Tokyo next week after the Nikkei index reached its highest level since the March 11 quake and tsunami disaster, dealers said Friday. "We see some signs that Japanese shares are overheating a bit," said Katsuhiro Kondo, market analyst at Tokai Tokyo Securities Co. "It won't be surprising if profit-taking starts to kick in at anytime."
In the week to July 8, the benchmark Nikkei index at the Tokyo Stock Exchange climbed 2.73 percent, or 269.66 points, to 10,137.73, a four-month high at close on Friday. The Nikkei index topped the 10,200 mark in early Friday trading for the first time since the March 11 disaster. The Nikkei had plunged after closing at 10,254.43 on the day of the disaster. The Topix index of all first section shares rose 4.94 percent, or 41.14 points, to 833.20. Tokyo shares were buoyed as optimism about a recovery in US employment conditions and a weaker yen supported exporters.
Investors were closely watching official US employment data due out later Friday after jobs figures from the payrolls firm ADP showed stronger-than-expected gains for June, Kondo said. "Markets will open next week after seeing the official US employment data," Kondo said. "I'm sure market players on Wall Street have factored in that the jobs data is expected to show improvement. "I think there may be repositioning anytime next week," he said.
US stocks jumped Thursday on encouraging jobs data from ADP, which portends a positive reading for the official nonfarm payrolls report on Friday. Kondo, who expects a Nikkei range between 10,000 and 10,200 next week, said he will not feel comfortable to see the Nikkei rise above the pre-disaster level within less than four months of the quake. "We've seen positive economic data recently, but once investors start feeling that the figures do not necessarily show the reality of the economy, the market will lose momentum," he said.
"I think the focus next week will be whether the Nikkei can have solid support at around the 10,000 mark."
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