TOKYO (Thomson Financial) - Japanese shares are likely to open lower Monday, tracking the decline on Wall Street Friday, with investors seen adopting a cautious stance ahead of major economic events in the US.
President Bush is scheduled to deliver his State of the Union address Monday and the Federal Reserve is to hold its first regular meeting of the year on Tuesday and Wednesday following last week's surprising 75 basis point rate cut.
And the US Labor Department will release the non-farm payrolls data for December.
'The market may be volatile until the government and Congress agree on details of the stimulus package, with the issue of the use of public funds in resolving the credit crunch seen attracting close attention,' Tetsufumi Yamakawa, Goldman Sachs Securities chief economist, said in a note to clients.
Bush appealed Saturday for swift congressional action on an economic rescue initiative and an electronic surveillance law that soon expires.
The White House and leaders of both parties in the House of Representatives have agreed on the basis of a stimulus program, which would provide tax rebates to 117 million families and give businesses 50 billion US dollars in incentives to invest in new plants and equipment. In his weekly radio address, Bush asked Congress to approve the agreement as soon as possible.
'Although the government has so far been reluctant to use public funds, it may have to compromise on the issue,' Yamakawa said.
Investors will also pay close attention to talk of a potential buyout of a trouble bond insurer following last week's reports in UK newspapers that billionaire Wilbur Ross is in talks about acquiring bond insurer Ambac Financial Group Inc.
Word of Ross's interest follows comments by New York State regulators that indicate they would consider lending support to the struggling bond insurance industry.
While uncertainty remains over what role regulators might play, the comments initially helped reassure Wall Street and made room for stocks to rally.
Investors will also focus on the Fed meeting and forthcoming economic data.
'If the Fed makes another rate cut, the market will likely to take the decision positively, but the market may turn cautious, as there are expectations that the forthcoming data may revive concerns about the US economy,' said Koji Takeuchi, a Mizuho Research Institute senior analyst.
The Dow Jones Industrial Average closed down 171.44 points or 1.4 percent at 12,207.17 Friday, while the technology-heavy Nasdaq composite index fell 34.72 points or 1.5 percent to 2,326.20.
The Chicago-traded Nikkei futures contract settled at 13,470 points, down from 13,690 at the Osaka Securities Exchange Friday, suggesting a weak start for the Tokyo market.
The blue-chip Nikkei 225 Stock Average closed 536.38 points or 4.1 percent higher at 13,629.16 Friday and the broader Topix rose 60.32 points or 4.7 percent to 1,344.77.
Ahead, the Bank of Japan will release 10 minutes before the opening bell its December corporate service price index, while automakers, including Toyota Motor, will report auto production and sales data for December and 2007.
Nikko Cordial, Nippon Steel, Fanuc, Hoya and NEC Electronics will release their earnings for the first nine months of the fiscal year.
Stocks to watch include NTT DoCoMo after a newspaper reported that Japan's largest cellphone carrier is expected to post about 600 billion yen in operating profit for the nine months to December, far less than the 676.9 billion yen it made a year earlier because of the increasing number of subscribers who have switched to new discounted payment plans.
Bridgestone may move on a report that Japan's largest tire maker plans to strengthen its marketing effort in China, expanding its store network there from about 700 at present to 1,700 by the end of 2012.
(1 US dollar = 106.75 yen)
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