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Tokyo stocks seen stable, eyes on US market

TOKYO: Tokyo stocks are likely to be stable to firmer this week as investors continue to snap up low-priced shares in smokestack industries and domestic demand-related stocks, market players said.

But with few major market-moving factors expected on the domestic market, Tokyo shares will remain vulnerable to movements in New York stocks, which are expected to remain volatile in the run-up to the FOMC meeting in February.

The policy-setting U.S. Federal Open Market Committee (FOMC) is scheduled to meet on February 1 and 2, and is widely expected to raise short-term interest rates by at least 0.25 percentage points.

The Dow Jones industrial average closed up 1.21 percent on Friday at a record high of 11,722.98.

"Shares susceptible to U.S. markets, such as high-tech stocks, could move with a weaker bias. But the Tokyo's downside would be supported by buying interest in domestic-demand related shares," said Shoji Hirakawa, strategist at Kokusai Securities.

Market participants expect the benchmark Nikkei average of 225 leading shares to fluctuate between 185,000 and 19,300.

The key market gauge ended the Friday session up 123.26 points or 0.65 percent at 18,956.55.

It rose 4.19 percent on the week, boosted mainly by sharp gains in biotechnology-related shares, warehouse stocks, and other defensive stocks.

Investors bought up bio-tech shares in their search for alternative growth sectors while the once high-flying information technology sector ran through its correction phase.

The warehouse sector topped the list of percentage gainers on the first section of the Tokyo Stock Exchange on Thursday and Friday amid expectations that a likely expansion in electronic commerce would boost demand for storage facilities.

Traders were divided in their views on when core information technology stocks, such as Sony Corp would bottom out.

Some traders said the high-tech share prices had lost enough ground and prices could start crawling their way back up in a few days.

"High-tech may take over bio-tech's position as a market leader as soon as the middle of the week," said Hidenori Karaki, equities manager at Tokyo Mitsubishi Personal Securities.

Others said it would take a little more time for infotech shares to find their floor.

"Infotech stocks climbed up continuously for about a year. And the correction started just 10 days ago or so. They would need some more time (to hit the bottom)," Kokusai's Hirakawa said.

Sony's share prices will be closely watched by market participants as its performance is widely believed to provide cues about when the entire infotech market is ready to bounce back.

The king of consumer electronics has lost more than 25 percent from its intra-day high of 32,250 marked on January 4.

A trader with a second-tier brokerage said it might not be until the planned release of the next generation PlayStation game console on March 4 that Sony shares regain their upward momentum.-Reuters