TOKYO: Japan’s Nikkei edged higher on Monday as investors took heart from a rally in Chinese shares on the promise of additional stimulus measures, triggering buying in firms exposed to China.
After ending the morning session lower, the Nikkei share average changed course and rose 0.37 per cent to close at 22,614.82, moving off a six-week low of 22,212.57 hit during the previous session.
Japan’s benchmark index is now down around 7.5 per cent since hitting a 27-year high on Oct. 2 as worries over trade disputes, Saudi Arabia and Italy’s free-spending budget in recent weeks have weighed on sentiment.
On Monday, Asian share markets swung into the black as the promise of more Chinese stimulus helped offset some of those geopolitical concerns while investors braced for the peak of the US earnings season.
“I think the rebound in Shanghai shares had a big impact,” said Yutaka Miura, a senior technical analyst at Mizuho Securities. “After that, the yen weakened somewhat. That, in turn, led to buying of Nikkei futures.”
Shares of equipment maker Yaskawa Electric Corp and industrial robot maker Fanuc Ltd, benefited from the jump in Chinese shares, rising 3.6 per cent and 0.5 per cent, respectively.
Nabtesco Corp, another firm with a large China-focus, ended down half a per cent but managed to partly recover steeper losses from earlier in the day.
Kawasaki Heavy Industries Ltd plummeted 9.3 per cent to close at its lowest level since November 2016 after the company slashed its forecasts for the current fiscal year, hurt by losses related to its railcar business and to Rolls Royce’s Trent 1000 engine problems.
The heavy industrial manufacturer cut its operating profit forecast for the fiscal year ending March 2019 to 66 billion yen ($587 million) from 75 billion yen, while leaving its sales forecast intact at 1.65 trillion yen.
Index-heavyweights such as SoftBank Corp and Nintendo declined 1.0 per cent and 0.1 per cent, respectively.
Investors awaited corporate earnings season in Japan to get into full swing later this week.
Toru Ibayashi, executive director of Wealth Management at UBS Securities Japan, said he expected corporate earnings to show slower growth in net profit for Topix as a whole, especially the Topix 500.
“To be honest, I think earnings will peak out,” said Ibayashi. “I think it will be a bit tough, since markets haven’t fully priced that in.”
The broader Topix edged 0.15 per cent higher to end at 1,695.31, with 23 of the 33 subsectors finishing the day in positive territory.
Source: Economic Times