TOKYO: Japan’s Nikkei share average ended higher on Monday, as investors treaded cautiously after last week’s steep losses and shrugged off disappointment over a meagre rate cut in China.
The Nikkei closed up 0.37% at 31,565.64 on Monday, snapping a three-day losing streak.
The Nikkei slumped 3.15% last week, its worst weekly performance this year.
The index is, however, up about 21%, by far the best performing Asian stock market.
It had briefly slipped into the red on Monday after China’s central bank trimmed its one-year lending rate by 10 basis points (bps) and left its five-year rate unchanged, in a surprise to analysts who had expected cuts of 15 bps to both.
The broader Topix gained 0.17% at 2,241.10.
“A Chinese financial crisis should basically be China’s problem, unless real-estate sector troubles spread to the banking sector,” said Masayuki Kichikawa, chief macro strategist at Sumitomo Mitsui DS Asset Management.
“Of course China and the US are sources of uncertainty, so I would say our stance right now is very cautiously optimistic” on Japanese stocks, Kichikawa added.
“If US long-term yields stabilize around current levels, that is not very disadvantageous to Japanese equity markets.”
The US 10-year yield currently sits around 4.306%.
A break above the 4.338% level last seen in October 2022 would likely bring yields to their highest since November 2007.
Investor attention will be on Federal Reserve policymakers as they kick off their annual symposium in Jackson Hole, Wyoming on Thursday, with Chair Jerome Powell delivering a speech on Friday.
Tokyo Electric Power Co led gainers with a 4% rise, making utilities the Nikkei’s second-best performing sector.
Japanese Prime Minister Fumio Kishida is meeting with fishermen to clear the final hurdle to releasing radioactive water from the company’s wrecked Fukushima plant.
BofA Global Research strategists said Japanese companies are likely to hike full-year forecasts when they report interim results, leading to a surge in the market during October to December based on their analysis of April-June earnings.