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
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Shock poll shows voters believe Ukip is to the left of the Tories
New era of cheap oil 'will destroy green revolution'
Ukip founder Alan Sked and Nigel Farage 'begged Enoch Powell to stand as a candidate'
Ukip candidate jokes about 'shooting peasants' in racist and homophobic rant
iJobs Money & Business
£32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...
£Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...
£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...
£45000 - £55000 per annum + Benefits: Ashdown Group: An exciting opportunity h...