The Coming Week in Asia: Larger Japanese Companies Feel Better About Business

TOKYO -- The question that will be on traders' minds this week is whether business conditions are finally improving for Japanese corporations. But the answer will depend on what part of the Bank of Japan's quarterly tankan report, due out this week, they dig into.

In the report, investors will be examining the diffusion index, or DI, which is seen as a gauge of Japanese business conditions. The DI subtracts the percentage of firms reporting unfavorable conditions from favorable responses. A positive number, therefore, means there are more optimists than pessimists.

Most market watchers expect that the September DI for large manufacturers will improve to plus seven, up from plus three in the last survey. This would mean managers at large firms thought business conditions were improving for the seventh consecutive quarter. The survey is also expected to show a forecast that the December DI will improve even further, to plus 10. ...