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Japan’s Nikkei share average rose in choppy trade on Monday, recovering from extended lows, while airline shares gained after oil prices extended their losses.
The Nikkei benchmark rose 0.6 percent at 19,391.06 in mid-morning trade after traversing across positive and negative territory.
On Friday, the benchmark had closed at its lowest level since March 16 as hedge funds were seen taking profits.
Earlier this month, the Nikkei hit 15-year highs on expectations that the economy will recover thanks to weak oil prices and higher wages as well as hopes for better shareholder returns and corporate governance. But given the sharp rises, a correction is natural before it starts rising again, analysts said.
“The Nikkei will likely rise in the mid-term. What’s not priced in the market now is hopes for higher EPS for the next fiscal year,’’ said Hiroyuki Nakai, chief strategist at Tokai Tokyo Research Center, adding that he expects a 15-20 per cent rise in company profits in the fiscal year through March 2016.
“A weaker yen and a drop in oil prices should be a tailwind to many Japanese companies,’’ Nakai said.
Oil shares down
Oil shares fell, with Inpex Corp falling 2.0 per cent, while airline shares rose, with ANA Holdings rising 1.3 per cent and Japan Airlines gaining 1.6 per cent.
Oil prices dipped in Asian morning trading on Monday, adding to steep losses in the previous session, as Iran and six world powers tried to reach a deal that could add oil to the market if sanctions against Tehran are lifted.
Kikkoman Corp jumped 5.6 per cent to a record high of ¥3,935 after the Nikkei business daily said the soy sauce maker will report a record operating profit of about ¥24.7 billion for the year ending March.
Meanwhile, the market shrugged off weak government data which showed that Japanese factory output fell 3.4 per cent in February from the previous month partly as companies curbed output due to the Lunar New Year holidays.
The broader Topix as flat at 1,553.13 and the JPX-Nikkei Index 400 rose 0.1 per cent to 14,144.67.
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