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.
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.