Tokyo Stocks Likely Range-Bound Next Week

November 20, 2020

Tokyo- Tokyo stocks are expected to be range-bound next week, as selling pressure from the market's correction from a 29-year high is countered by long-term optimism about an economic recovery, analysts and brokers said.

This week, the Nikkei average of 225 selected issues listed on the Tokyo Stock Exchange's first section rose 141.50 points, or 0.56 pct, to 25,527.37.

After finishing above 26,000 for the first time since May 1991 on Tuesday, the Nikkei stumbled for three straight days to correct what brokers saw as an overheating market.

Next week, the Nikkei is expected to move mainly between 25,200 and 25,900, analysts and brokers said.

Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co., said that the market is likely to continue facing selling pressure as players seek to "lock in profits after a sense of accomplishment" from reaching the threshold of 26,000.

On the other hand, the market will also be propped up by investor confidence in the economy's gradual rebound since bottoming out in April-June, said Hirohumi Yamamoto, strategist at Toyo Securities Co.

Stocks may be swayed by U.S. economic indicators such as the purchasing managers' index for November, slated to be released on Monday by British financial data provider IHS Markit, brokers said.

The PMI will "reveal the state of the economy before the holiday shopping season begins on Black Friday," Yamamoto said.

Masayuki Otani, chief market analyst at Securities Japan Inc., said that there is room for an upside as investors may channel their interim dividends from the April-September period back into the market. Jiji Press