Jiji Press TOKYO (Jiji Press) — The Tokyo stock market is expected to shift its focus to economic data this week, with fears of an economic slowdown stemming from U.S.-China trade friction driving speculation that the U.S. Federal Reserve will cut interest rates.
Last week, the 225-issue Nikkei average edged up 17.28 points, or 0.08 percent, to end at 21,275.92 on the Tokyo Stock Exchange, as a wait-and-see mood prevailed ahead of a closely watched meeting between U.S. President Donald Trump and his Chinese counterpart, Xi Jinping, on Saturday on the sidelines of the ongoing Group of 20 summit in Osaka.
This week, the Nikkei is expected to move mainly between 20,500 and 21,500, analysts and brokers said.
The most common scenario for the Trump-Xi summit shared by market players is that the U.S. and Chinese leaders will agree to continue bilateral trade talks and that additional U.S. tariffs on Chinese imports will be averted, brokers said.
Such an outcome would trigger some buying of Tokyo stocks. But if the talks break down and punitive tariffs on $300 billion’ worth of Chinese imports are implemented, global financial markets will likely be in turmoil early this week, brokers said.
Once the outcome of the U.S.-China summit is confirmed, “market attention will shift to economic situations,” said Yutaka Miura, senior technical analyst at Mizuho Securities Co., noting that the U.S. Institute for Supply Management’s manufacturing index for June is due out on Monday.
“The market will be caught in a tug of war between expectations for a U.S. interest rate cut and concerns over an economic slowdown,” Miura said, suggesting big gains are unlikely for Tokyo stocks this week.