Nikkei breaks four-session losing streak, closes up 1.1%

Toru Yamanaka | AFP | Getty Images

Markets in Australia and Japan rang in the year of the monkey on a slightly higher note, erasing early losses Monday. Most major Asian markets remained closed for the Lunar New Year holidays.

Down Under, the ASX 200 erased losses of as much as 0.70 percent to close flat at 4,975.40, with the financial sector seeing losses of 0.50 percent. Japan's NIkkei 225 also retraced losses of as much as 1.50 percent by afternoon trade to close up 184.71 points, or 1.10 percent, at 17,004.30, snapping a four-session losing streak.

Evan Lucas, market strategist at spreadbetter IG, said in a morning note that with only Australia and Japan open for much for the week, "Volumes will be well below average and there tends to be a build-up of global leads that is released once Asian investors return to their desk - expect 'release valve' trading late in the week."

Markets in mainland China and Taiwan are closed all week. Other markets closed today include Hong Kong, South Korea, Malaysia, the Philippines, Vietnam and Singapore.

Banking and finance stocks in Australia and Japan came under pressure. Down Under, the country's so-called four biggest banks - ANZ, Commonwealth Bank of Australia, Westpac and NAB - closed between 0.08 and 1.54 percent lower.

Japanese financials Mitsubishi UFJ, SMFG and Mizuho Financial retraced some losses to trade mixed, between down 0.29 percent and up 0.61 percent.

Last week, Citigroup downgraded Japanese megabanks Mitsubishi UFJ, Sumitomo Mitsui Financial (SMFG), and Mizuho to Sell, saying that the Bank of Japan's introduction of negative interest rates will likely reduce overall megabanks' net interest income by around 300 billion yen, or around 9 percent of Citi's net profit forecast for this fiscal year.

Major exporters in Japan retraced losses to trade mostly up, with shares of Nissan gaining 0.75 percent, Sharp up by 0.57 percent and Honda higher by 0.35 percent. Shares of Toyota and Sony, however, extended losses to trade down 1.06 and 1.76 percent, respectively.

The dollar-yen pair, which was at 116.94 at market open, gained 0.39 percent to 117.35. At the start of last week, the pair was above the 120 level. A weaker yen is a positive factor for exporters as it increases their overseas revenues when converted into local currency.

Australian miners were mixed, with Rio Tinto gaining 2.11 percent and iron ore producer Fortescue down 3.43 percent.

Symbol
Name
Price
 
Change
%Change
NIKKEI
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HSI
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ASX 200
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SHANGHAI
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KOSPI
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CNBC 100
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Oil prices remain volatile, with the U.S. West Texas Intermediate crude futures gaining 0.91 percent to $31.17 a barrel in Asian trading hours, after finishing 0.1 percent lower Friday. Global benchmark Brent crude futures were up 1 percent at $34.40 a barrel, following a 1.2 percent decline on Friday.

Energy plays traded mostly up, with Japan's Inpex erasing early losses to close up 0.49 percent, Japan Petroleum down 3.60 percent and Santos retracing early losses to close up 0.31 percent. Woodside Petroleum traded up 0.59 percent.

In Thailand, shares of hypermarket operator Big C Supercenter were up 9.25 percent after France's Casino Group agreed to sell its majority stake in the company to TCC Group.

Major U.S. indexes also finished Friday down, with the Dow Jones industrial average losing 211.75 points, or 1.29 percent, to close at 16,204.8. The S&P 500 ended 35.40 points, or 1.85 percent, lower at 1,880.05 and the Nasdaq composite shed 146.41 points, or 3.25 percent, to end at 4,363.14.

Statistics released on Friday showed the U.S. economy created 151,000 jobs in January, below the market expectation of 190,000 and compared with 292,000 jobs reported in December. The unemployment rate fell to 4.9 percent.

"Wage growth was much stronger than expected and conditions strengthened," said Lucas. "This led to a very sharp reversal in U.S. dollar trade, triggering all sorts of mayhem in currencyland."

The dollar index, on which the dollar is weighted against a basket of currencies, was at 97.143 during Asian trading hours, up from around 96.96 on Thursday and 97.03 on Friday.

On the data front, India is set to release fourth quarter 2015 gross domestic product (GDP) numbers on Monday. Analysts estimate a 7.3 percent expansion in the December quarter.

Moody's Analytics wrote in a note last Friday, "Though the growth rate appears high, we believe India is still operating under a negative output gap. Potential GDP is likely around 10 percent."