Tokyo stocks are seen staying rangebound next week as the impact of an ongoing nuclear crisis and expectations for economic recovery later this year continue to conflict. "There is little incentive to chase the market higher for now," said Hiroichi Nishi, equity general manager at SMBC Nikko Securities.
"Meanwhile, the downside will be limited on expectation that the Japanese economy will pick up from the autumn," Nishi said, noting the supply chains disrupted by the March 11 earthquake have been gradually restored.
Kenichi Hirano, general manager at Tachibana Securities, said: "GDP figures turned out to be very weak, but the market's consensus is for a recovery in the latter half of the financial year."
Official data released Thursday showed that gross domestic product (GDP) had shrunk by an annualised 3.7 percent in January-March, against the market expectation of a 2.0 percent fall.
In the week to May 20, the benchmark Nikkei index at the Tokyo Stock Exchange lost 0.43 percent, or 41.69 points, to 9,607.08. The Topix index of all first section shares also fell 1.45 percent, or 12.17 points, to 827.77.
Tokyo Electric Power (TEPCO), which operates the crippled Fukushima Daiichi nuclear power plant, announced after the market's close Friday the biggest ever loss for a Japanese firm outside the financial sector.
The beleaguered utility posted an annual net loss of 1.25 trillion yen ($15 billion) and said its president Masataka Shimizu would step down over the crisis. Hirano said: "TEPCO's earnings were weak for sure, but it may not put a drag on the market next week as the market had already expected the worst."
TEPCO's Fukushima Daiichi nuclear plant was crippled by the massive earthquake and tsunami and has spewed radiation in the world's worst nuclear crisis since Chernobyl 25 years ago.
The market is closely watching Japan's trade data for April due out on Wednesday and its possible impact on the forex market, brokers said.
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