April 5, 2014 2:57 am JST

Japan's stock investors awaiting fresh news

TOKYO -- Amid a lack of clear direction in the market, many investors in Japanese stocks are sitting on the sidelines, eager to hear key announcements in the coming weeks.

     The Nikkei Stock Average fell for the first time in three days Friday, while the Topix logged its first slide in 10 days. Trading was slow in the morning, and turnover on the first section of the Tokyo Stock Exchange fell to its lowest level this year.

     The futures market was even more stagnant. Turnover of the key June contract for Nikkei average futures amounted to 34,400 -- the lowest level since Nov. 14, 2012, when the figure dropped to 25,535. On that day, then-Prime Minister Yoshihiko Noda announced the dissolution of the lower house, launching what became an Abenomics-fueled market rally.

     One factor behind the lack of activity is uncertainty regarding the U.S. economy. Indicators there are continuing to improve. But "if they are too good, the Federal Reserve may raise interest rates sooner," says Shun Maruyama, chief strategist at BNP Paribas Securities (Japan). "Should U.S. stocks, now trending high, come under selling pressure, the impact will spread to Japanese stocks," Maruyama adds.

     Another key event is the Bank of Japan's two-day policy meeting starting Monday. Previously, investors thought the central bank would adopt additional easing steps out of concern over the consumption tax hike.

     But with the latest price trends and Tankan business sentiment survey generally in line with BOJ projections, there is weakening justification for stepping up easing measures, a staffer at a foreign asset management company says while admitting the possibility of a surprise.

     China will soon announce its first-quarter gross domestic product, and the Federal Open Market Committee will meet. And in the latter half of April, the BOJ will hold its second policy board meeting for the month.

     "The market will probably move up or down whenever fresh news comes out, but it will be difficult to significantly adjust shareholdings for a while," says Hidetoshi Oi, head of execution sales at Barclays Securities Japan.