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Japan's Nikkei Seen Soft after Rally; Election Eyed

Japan's Nikkei average is likely to take a breather on Tuesday, weighed down by exporters such as Canon that led a rally the previous day, while trade may be cautious ahead of U.S. economic data and the election.

Market analysts say many expect Japan's opposition Democratic Party to win the Aug. 30 election but investors remain hesitant about actively take positions before they actually see the results.

"The market will likely start the day under pressure after sharp gains yesterday on short-covering and U.S. stocks also ended mixed," said Kazuhiro Takahashi, general manager at Daiwa Securities SMBC.

"Trade could be also slow as investors want to wait and see economic data such as Case-Shiller home price indexes."

Nikkei futures traded in Chicago closed at 10,610 on Monday, up 0.6 percent from the Osaka close.

Market participants expect the benchmark Nikkei to move between 10,400 and 10,650 on Tuesday. It jumped 3.4 percent the previous day to end at 10,581.05, erasing a 3.4 percent
decline it posted last week.

U.S. stocks ended the day barely changed on Monday as investors took a break from a four-day rally that lifted major indexes to 10-month highs.