TOKYO: Japan’s Nikkei share average rose in a choppy session on Monday, as gains in technology stocks lifted the benchmark index, while caution ahead of a domestic election and corporate earnings weighed on sentiment.
The Nikkei managed to turn around after starting in the red, rising 0.3% to 39,110.95 by the midday break, while the broader Topix was up 0.04% at 2,689.99.
Domestic tech shares followed their US peers higher after an earnings-driven jump in Netflix shares and broader gains across tech stocks on Friday.
The Dow Jones Industrial Average and S&P 500 chalked up record closing highs on Friday, with the Nasdaq also in positive territory, thanks to the tech bump.
Nikkei heavyweight chip-testing equipment maker Advantest was up 2.2% to offer the biggest lift, followed by chip-making equipment giant Tokyo Electron, adding 1.1%.
But the index struggled for momentum outside of tech shares, which analysts attributed to caution before more company earnings announcements later this week.
A general election will also be held in Japan on Oct. 27, where it remains to be seen whether the nation’s ruling party, the Liberal Democratic Party (LDP), will succeed in winning the 233 seats needed to keep a lower-house majority by itself.
“It seems like investors are refraining from active trading in anticipation of these events”, creating a heavy upward resistance, said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management.
Japan’s Nikkei bounces on Wall Street gains, softer yen
If the LDP fails to retain a majority in the upcoming election, that could “heighten uncertainty and potentially lead to increased volatility in the market”, he added.
Among other major decliners, Uniqlo parent firm Fast Retailing edged down 0.2%, along with telecoms company KDDI slipping 0.8%, and pharmaceutical firm Daiichi Sankyo losing 1.3%.
Of the Nikkei’s 225 constituents, 104 advanced while 118 declined.
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