Asia Markets

Shares in Japan, Australia rise, as market digests improved Tankan

Key Points
  • The Bank of Japan's "Tankan" survey found business confidence among large manufacturers improved over the past three months
  • Australian shares traded up, with major banks gaining
  • Markets in China, Hong Kong, India and South Korea were closed on Monday

Asia stocks traded higher on Monday, but several major markets were set to be shuttered for much of the week.

In Japan, the benchmark climbed 44.50 points, or 0.22 percent, to 20,400.78. The Topix index closed a touch lower, falling 1.13 points, or 0.07 percent, to 1,673.62.

Shares of Japanese automaker Nissan closed down 2.69 percent after it said on Friday that it was not able to sell some of its new vehicles because certain checks in the final vehicle inspection process were conducted by unqualified technicians.

Prior to market open, the Bank of Japan released the results of its "Tankan" survey that showed business confidence among large manufacturers in Japan improved in the three months from the previous survey in June. The headline number stood at plus 22 in the September survey, compared with June's plus 17. But the reading is expected to fall to plus 19 over the next three months.

The numbers are derived from taking the difference between those who find business conditions favorable and those who find it unfavorable. A positive reading indicates more businesses find conditions to be favorable.

"Manufacturers have done well in the past," Mitul Kotecha, head of Asia foreign-exchange and rates strategy at Barclays, told CNBC's "Street Signs," adding, "If we look now at the "Tankan," perhaps some of the weakness that we've see in the yen is also helping manufacturing confidence as well."

But whether such levels of confidence can be sustained is also important, according to Kotecha. "Japanese growth, as we heard, is growing well above trend, so the growth story is not a bad one."

In Australia, the ASX 200 closed up 47.69 points, or 0.84 percent, to 5,729.30.

Major banking shares climbed, with ANZ closing up 1.01 percent, Commonwealth Bank higher by 1.45 percent, Westpac up 1.07 percent and the National Australia Bank advancing 0.73 percent.

Thailand's SET Index traded up 1 percent at 1,689.93 in the afternoon, hovering near levels not seen since 1993.

Markets in China were closed for mid-Autumn festival and national day, while the South Korean market was closed for a designated "temporary holiday." Markets in Hong Kong and India were also closed.

Stateside, questions about the future of Federal Reserve Chair Janet Yellen led to some market moves on Friday, including a hiccup in stock prices and a rise in Treasury yields.

That followed a report that President Donald Trump met with former Fed governor and former Morgan Stanley executive Kevin Warsh, who was previously rumored to be a contender for the central bank's top post.

"Traders will continue to be vigilant as they search the news tickers for headline clues as to who the next Fed Chair will be, and how the tax reform process is going," said Stephen Innes, head of trading in Asia Pacific at OANDA, in a morning note.

In the foreign exchange market, the , which measures the greenback against a basket of currencies, traded at 93.394, climbing from as low as 93.124 earlier in the session.

But at least one analyst didn't expect the strength to last.

"While dollar rallied last week on perceived Fed hawkishness, euro slippage and new details of Trump's tax reforms, moves look stretched and is really just a short dollar positioning squeeze instead of a real turn," Vishnu Varathan, head of economics and strategy at Mizuho Bank, said in a Monday note.

Meanwhile, the Japanese yen was at 112.86 per dollar, with the greenback climbing from levels as low as 112.43 earlier in the session.

The Australian dollar also lost ground against the greenback, trading at $0.7818, off an earlier session high of $0.7847.

Innes added that forex markets will "continue to be sensitive to headline risk" as the start of the fourth quarter brings "a deluge of central bank speakers along with the main sentiment and inflation prints."

He also said that traders are likely to watch developments in Spain, where regional officials in Catalonia said a majority voted in favor of breaking away in a banned referendum.

The euro traded at $1.1764 Monday afternoon, off earlier highs above $1.18.