Tokyo shares likely to hold above 18,000 points

Japanese share prices are likely to hold above 18,000 points, supported by the weaker yen and optimism about the US economic outlook, dealers said on Friday. But they said investors need fresh incentives to push shares higher and will be watching several key events including Japanese machinery orders data on Monday and a Bank of Japan interest rate decision on Thursday.
For the week to July 6, the Tokyo Stock Exchange's Nikkei-225 index of leading shares edged up 2.58 points to 18,140.94, after a 0.28 percent fall the previous week. The broader Topix index of all first-section shares rose 4.79 points or 0.27 percent to 1,779.67, after rising 0.17 percent.
Shares stand to gain if the yen weakens further, bolstering optimism in the outlook for exporter earnings, dealers said. Japanese interest rates will come into focus as the Bank of Japan holds a two-day monetary policy meeting through Thursday.
Although the central bank is not expected to change its key interest rate from the current level of 0.5 percent players want to hear whether BoJ governor Toshihiko Fukui will drop any hints about when the next hike might come.
Data on Japanese machinery orders are due on Monday - a report that often moves the market.
If machinery orders data report for May "confirms the steady recovery of the economy, it should further boost the market," Nomura Securities analysts wrote in a report. They said market participants have been comforted recently by the performance on Wall Street.
"The market will closely monitor governor Fukui's press conference to hear his thoughts regarding interest rate rises," it said, adding that the Nikkei index is expected to stay between 18,000 and 18,500 points over the week.
Analysts believe that the BoJ will raise interest rates again sometime in the next few months as key economic indicators show the world's second largest economy is on a firm recovery track.
Investors will also keep an eye on politics as Prime Minister Shinzo Abe battles falling popularity ahead of the upper house election on July 29.
Many investors already expect Abe's ruling Liberal Democratic Party to struggle and possibly lose many seats in the election, and the market has already factored in potential policy shifts, Yano said.