Nikkei Ends Flat, Shrugging off Election Results

Japan's Nikkei average finished almost flat on Monday.

Japan's Nikkei average finished almost flat on Monday after hitting its lowest in nearly four months as a stronger yen weighed on Canon Inc. and other exporters, but the market largely brushed aside the defeat of Prime Minister Shinzo Abe's ruling camp in Sunday's upper house elections.

The broader TOPIX index rose 0.35 percent after Nippon Steel Corp. and JFE Holdings Inc., the world's No. 2 and No. 4 steelmakers, reported strong quarterly gains in profit on higher prices, and JFE raised its full year forecast by 4 percent.

Investors also picked up a series of stocks with solid earnings results such as Fanuc Ltd., providing support to the market.

Katsuhiko Kodama, senior strategist at Toyo Securities, said investors' eyes have now turned to corporate earnings, Wall Street and the yen as the market seems to have largely factored in the ruling party's defeat in the elections.

"Investors here are very wary about the New York market, and if it further extends losses, the Nikkei might have a hard time defending the 17,000 level," he said.

"Still, it appears losses are limited as corporate earnings results are good, and the market seems to have pretty much factored in the outcome of the elections."

The Nikkei added 0.03 percent, or 5.49 points, to end at 17,289.30 after logging its lowest level since April 2.

The broader TOPIX index rose 6 points to 1,705.71.

Tokyo saw active trade with 2.3 billion shares changing hands, compared with an average daily volume of 2.3 billion shares in June. Advancers beat decliners by a ratio of more than two to one.

YEN WEIGHS, STEEL STOCKS UP

Exporters lost ground as the yen hit a three-month high against the euro in early trade on Monday.

Canon, which generates about three-quarters of its sales overseas, dropped 2.6 percent to 6,340 yen and Sony Corp. slipped 1.1 percent to 6,350 yen.

Shares of JFE jumped 5 percent to 8,350 yen after the solid results while shares of Nippon Steel, which left its annual forecast unchanged, gained a less impressive 3.9 percent to 918 yen.

Nagayuki Yamagishi, strategist at Mitsubishi UFJ Securities Co. Ltd., said the upward revision by JFE was unexpected.

"Normally, we don't see full-year upward revisions at this time of the year, but the fact that they did it makes me think that their earnings must be really good and force them to upgrade," he said.

Fanuc, a leading maker of industrial robots, climbed 1.7 percent to 12,870 yen after reporting solid first-quarter results on Friday, boosted by increasing capital investment worldwide.

Elsewhere, shares of Mitsubishi Electric Corp. surged 9.9 percent to 1,266 yen after the company reported a 63 percent rise in quarterly profit, helped by strong sales of elevators, and raised its first-half forecast.

NTT DoCoMo Inc., Japan's largest mobile phone operator, lost 2.4 percent to 166,000 yen after reporting a profit decline for the April-June first quarter of the business year.