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Japan’s Nikkei share average was flat in choppy trade on Monday morning after profit-taking in cyclical stocks offset gains in drugmakers which had raised their earnings outlooks.
The Nikkei was flat at 17,178.97 in mid-morning trade after opening a tad higher.
The Nikkei has been trading above the psychologically important 17,000-line, but could struggle to make further gains without fresh catalysts, traders said.
Over the past week, the Nikkei benchmark index surged 1.9 per cent.
“There are few investors who want to chase the market higher until they see more news from overseas especially regarding a US rate hike,” said Yutaka Miura, senior technical analyst at Mizuho Securities.
The dollar was up 0.1 per cent at 104.00 yen buoyed by expectations that the US Federal Reserve will raise interest rates this year.
A US rate hike on the back of the recovering US economy would mean more export demand to the US from Japan, while exporters stocks benefit from a stronger dollar against the yen on hopes that their profits made overseas will rise when repatriated.
Mining stocks were the worst performers, with Inpex Corp falling 2.0 per cent and JapanPetroleum Exploration Co dropping 2.4 per cent.
Oil prices fell early on Monday as Iraq said it wanted to be exempted from any OPEC agreement to cut crude production, and as US drillers stepped up work.
Cyclical stocks like banks and exporters underperformed after their recent gains.
Mitsubishi UFJ Financial Group shed 1.0 per cent and Mizuho Financial Group declined 0.5 per cent.
Although the dollar stood tall against the yen, exporters languished after they rose in the past few week. Honda Motor Co dropped 0.7 per cent and Panasonic Corp declined 0.6 per cent.
Drugmakers staged rallies after raising their earnings outlooks. Sumitomo Dainippon Pharma gained 1.0 per cent after it raised net profit outlook to ¥10.9 billion from ¥8 billion for the April-Sept period.
Kobayashi Pharmaceutical Co rose 1.0 per cent after it raised operating profit forecast to ¥11.8 billion from 10.6 billion.
The broader Topix dropped 0.1 per cent to 1,363.61 and the JPX-Nikkei Index 400 declined 0.1 percent to 12,219.63.
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