International Markets: Tokyo - Nikkei faces a rollercoaster ride

JAPANESE stocks are set to seesaw this week, rising on optimism that the government will take steps to stimulate the economy and falling on any turmoil in Asia. Bonds are likely to fall.

"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

Voices
On the last day of campaigning before the polling booths open, the SNP leader has written to voters in a final attempt to convince them to vote for independence
scotland decidesIs a huge gamble on oil keeping First Minister up at night?
Arts and Entertainment
Rosalind Buckland, the inspiration for Cider with Rosie died this week
booksBut what is it like to be the person who inspires a classic work of art?
Life and Style
techApple has just launched its latest mobile operating software – so what should you do first?
News
A male driver reverses his Vauxhall Astra from a tow truck
newsThe 'extremely dangerous' attempt to avoid being impounded has been heavily criticised
PROMOTED VIDEO
Arts and Entertainment
Lionel Messi in action for Barcelona
filmSo what makes the little man tick?
Arts and Entertainment
tvReview: An undercooked end (spoiler alert)
News
i100
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Pharrell dismissed the controversy surrounding
musicThe singer said 'the last thing I want to do is degrade'
Sport
Cesc Fabregas celebrates his first Chelsea goal
footballChelsea vs Schalke match report
Arts and Entertainment
Toby Jones (left) and Mackenzie Crook in BBC4’s new comedy The Detectorists
tvMackenzie Crook's 'Detectorists' makes the hobby look 'dysfunctional', they say
Life and Style
fashion

Olympic diver has made his modelling debut for Adidas

News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant Birmingham

£18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Recruitment Consultant - Soho - IT, Pharma, Public Sector

£20000 - £25000 per annum + OTE £35,000 first year: SThree: The SThree group i...

Sales Executive

£20 - 24k (Uncapped Commission - £35k Year 1 OTE): Guru Careers: We are seekin...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week