A solid tone in global markets helped underpin Japanese equities and overall risk conditions held firm, although there was an important element of caution ahead of Wednesday’s OPEC meeting.
US equity markets retreated from their best levels on Tuesday, although still closed in positive territory, which helped underpin sentiment. A slightly weaker dollar tone helped regional markets hold support and there was relief surrounding overall yuan trends, which supported risk appetite. There was still an underlying tone of caution given the risks of wider volatility.
A slightly weaker dollar had some direct impact in curbing Nikkei support and oil prices also remained on the defensive, which had some impact in restraining equity prices. There was also a slightly more defensive tone surrounding Chinese markets on fears over tighter liquidity.
The Japanese industrial production data had little impact with a slightly weaker than expected gain of 0.1% for October offset by a revised gain of 0.6% the previous month.
After opening higher, the Nikkei index dipped lower as the yen gained some ground against the US currency. Overall trading conditions were choppy within relatively narrow ranges and the index was slightly higher into the session break. The market drifted lower after the break, although prevailing uncertainty had an important impact in restraining activity with little overall change in the market.
At the close, there was a slight gain of 1.44 points and 0.01% at 18,308.48.
Trends in the dollar and oil prices will be important for overall equity-market direction with the risk of volatile trading conditions on Wednesday, which will have an impact on Nikkei trends during Thursday.
Nikkei 225 Daily Chart