Tokyo stocks are expected to get support from buybacks in the coming week due to easing concerns over the European sovereign debt crisis, with eyes on a raft of US earnings reports. "The Tokyo market will test its topside next week supported by continued buybacks, but a powerful rally is unlikely in relatively slow trading we have seen recently," said Kenichi Hirano, operating officer at Tachibana Securities.
"Although fear persists over Europe, as nothing has actually been resolved, the market is seen taking a respite after getting over a crucial point for now," Hirano said.
The US earnings season gets under way in earnest next week, with major financials as well as high-tech giants such as Intel issuing their reports.
"Over 70 percent of US firms saw their April-June results exceed their forecast," Nomura Securities said in a note. "The focus is on whether they continued their good performance in July-September, when worries were widespread over a slowdown in the global economy," Nomura said.
In the week to October 14, the benchmark Nikkei 225 index at the Tokyo Stock Exchange rose 142.34 points or 1.65 percent to 8,747.96. The Topix index of all first-section issues gained 7.26 points or 0.98 percent to 748.81.
Stocks were buoyed by signs of progress in Europe's battle to contain its sovereign debt crisis. Extreme pessimism receded following a German and French pledge to shore up the region's banks affected by the debt crisis as well as the European Commission chief's call for an urgent recapitalisation of the banks.
Traders will also have an eye on Chinese data due Tuesday, including July-September GDP, which will give clues to the strength of the world's second biggest economy after long-term monetary tightening, Nomura said.