TOKYO: The benchmark Nikkei stock average may test 23,000 next week on continued buybacks, unless the Tokyo market pulls back amid concerns over its overheating.

This week, the Nikkei average of 225 selected issues listed on the first section of the Tokyo Stock Exchange jumped 985.84 points, or 4.51 percent, to 22,863.73 in a five-day winning streak through Friday.

The rally was supported by buybacks in response to growth in prospects for the global economy's recovery from a slump caused by the novel coronavirus pandemic.

Many analysts also pointed out that excessive liquidly provided by central banks to cushion the economic fallout from the pandemic flooded into stock markets around the globe.

Next week, the Nikkei is expected to move mainly between 22,300 and 23,300, analysts and brokers said.

"Tokyo stocks are likely to stay on a firm note," said Tomoaki Fujii, head of the investment research division at Akatsuki Securities Inc. He forecast that still having ample funds at hands investors will keep repurchasing stocks.

Ryuta Otsuka, strategist at the investment information department of Toyo Securities Co., said those who built up short positions after eruptive coronavirus outbreaks "are expected to continue to cover the positions," adding that short-covering purchases may last until the special quotation fixing on June 12 to settle June futures and options contracts.

Meanwhile, some other players see the possibility of profit-taking snapping Tokyo stocks' winning streak amid a growing sense of market overheating.

"The Nikkei has risen too fast, clearly," an official of a major securities firm said. "It would be no surprise if the market has a correction with the Nikkei tumbling as much as 2,000 points."

Otsuka said a sell-off would be likely if US-China tensions escalate and if there are negative coronavirus-related developments.

JIJI Press