Japanese shares are likely to trade higher this week – The Star Online

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TOKYO shares are likely to trade higher this week on a weaker yen, despite a rocky week which saw the Nikkei plunge on fears over weak China data, dealers said.

The Nikkei 225 Index had been making steady gains until Thursday when the benchmark index plummeted 7.3% after China published poor manufacturing data, stoking fears about the world’s second-largest economy which is a major trade partner with Japan.

That was followed by a turbulent Friday session with the index see-sawing in and out of negative territory for most of the day before ending 0.89% higher.

In the week to May 24, the Nikkei lost 3.47%, or 525.67 points, to 14,612.45. The broader Topix Index of all first-section shares fell 4.72%, or 59.16 points, to 1,194.08.

Nervous investors locked in profits after the Tokyo bourse rocketed in recent months as the yen weakened, giving a boost to Japan’s exporters whose products become more competitive overseas on a weak currency, which also inflates the value of their repatriated foreign income.

But the Nikkei “returned to a good level” on Friday, said Kenji Shiomura, strategist at Daiwa Securities.

“The market will likely stay well supported. It might take some time for the wound (from Thursday) to heal, but it will bottom out,” he added.

Kenichi Hirano, market analyst at Tachibana Securities, told Dow Jones Newswires: “The hot air had largely been removed from the market (on Thursday), allowing players waiting for a chance to buy.”

Investors will likely continue their focus on currency exchange rates this week, as the recent decline in the yen remains a key factor behind the Tokyo market’s strength, dealers said. – AFP