International Markets: Tokyo - Nikkei faces a rollercoaster ride
Sunday 25 January 1998
"The key factor will be Asia," says Pelham Smithers, a strategist at ING Baring Securities (Japan). "The position in Indonesia doesn't appear to be able to last seven days without a major step being taken."
The Indonesian rupiah plunged for a seventh day on Friday, falling 20 per cent against the dollar as several banks froze lending.
The Nikkei 225 index is likely to trade between 16,300 and 17,300 this week, traders say. The index gained 4.6 per cent last week to close at 16,789.11.
Supporting stocks and hurting bonds last week were hints from officials that Japan will drop its commitment to fiscal reform in favour of stoking the economy. Suggestions include higher spending on infrastructure and more income tax cuts.
"There's a significant amount of pressure on Japan to do something to boost domestic demand," says Cameron Umetsu, senior economist at UBS Securities. "It's no longer a question of if, but of what magnitude." Bond yields are likely to rise further in the days ahead, he said.
Last week the benchmark government bond yield, maturing in September 2005, rose 16 basis points to 1.805 per cent, its highest since 13 October.
More stimulus steps could be drawn up by 20 February, said a senior legislator in the ruling Liberal Democratic Party. The government's goal is to push the Nikkei back to 18,000, its level on 31 March, 1997. Some economists say the new measures may have limited impact, but the government is keen to boost the value of banks' stock portfolios.
Investors and traders are confident that the weak economy will keep interest rates low.
Economic indicators out in the week ahead aren't likely to alter the view that the economy is struggling, and will probably not influence bonds much. Last month's supermarket and department store sales figures are released on Monday. In November, supermarket sales fell 4.5 per cent on the month a year earlier, while department store sales fell 3.5 per cent.
The market is awaiting Thursday's release of December industrial production figures. Production is expected to have risen 1.3 per cent last month, after falling 5 per cent in November from October.
On Friday the government is expected to report that Japan's unemployment rate has risen to 3.6 per cent, a post-war high.
Copyright: IOS & Bloomberg
- 2 Top Gear: Jodie Kidd, Philip Glenister and Guy Martin 'in advanced talks' to join show
- 3 General Election 2015: 14-year-old boy asks Nick Clegg – 'can you kill Katie Hopkins?'
- 4 University student in court for allegedly covering housemates' food in window cleaner and spit
Italian police 'reveal' what Jesus looked like as a young boy
Mysterious 'X-Files' sounds heard miles above the Earth
University student in court for allegedly covering housemates' food in window cleaner and spit
Garland shooting: Isis claims attack on Prophet Mohamed cartoon contest in Texas as its first action on US soil
Met Gala 2015: Beyoncé manages to out-skimp Rihanna, Miley and Kim Kardashian combined with near-naked ensemble
In defence of liberal democracy
The Rothschild Libel: Why has it taken 200 years for an anti-Semitic slur that emerged from the Battle of Waterloo to be dismissed?
General Election 2015: UK will be 'run for the wealthy and powerful' if Tories retain power, Labour warns
General election live: SNP suspends two members for disrupting Labour rally
Schools forced to act as 'miniature welfare states' with teachers buying underwear and even haircuts for poor pupils
Andy McSmith's Sketch: Feisty audience is the real star of an enlightening show
iJobs Money & Business
£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...
£25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...
£215 per day: Ashdown Group: Junior Project Manager (website, web application ...
£40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...