Nikkei seen rangebound after China rate hike

TOKYO (BestGrowthStock) – Japan’s Nikkei average is expected to stay rangebound on Monday, as generally strong market sentiment will likely be offset after China’s central bank raised interest rates on Saturday for the second time in just over two months.

Market players said that as the move had been widely anticipated, it may not have a strong negative impact because the underlying sentiment that helped lift the Nikkei to its highest level since May 14 on Wednesday remains bullish.

Nikkei futures in Chicago closed at 10,320, up 0.4 percent from the Osaka close of 10,280.

“Everyone will watch carefully how the market reacts to the rate hike. We knew it was coming, so I think negative reaction to the news will probably be limited,” said Hiroichi Nishi, general manager at Nikko Cordial Securities.

The People’s Bank of China said it will raise the benchmark lending rate by 25 basis points to 5.81 percent and lift the benchmark deposit rate by 25 basis points to 2.75 percent.

“With Wall Street closed last Friday, and ahead of New Year market holidays investors will likely be conservative today,” Nishi said.

The benchmark Nikkei (.N225: ) will likely trade between 10,200 and 10,300, analysts said, after reaching a seven-month intraday high last week.

Investors said that in the last trading week of the year the market will look for more good news showing economic recovery in the United States.

U.S. economic data due this week include the S&P Case-Shiller home price index and Consumer Confidence data on Tuesday and jobless claims and pending home sales on Thursday.

STOCKS TO WATCH:

— Hitachi Ltd (6501.T: ), Canon Inc (7751.T: )

Taiwan’s Hon Hai Precision Industry Co (2317.TW: ) will invest about 100 billion yen ($1.2 billion) in an LCD panel joint venture between Hitachi and Canon, the Nikkei newspaper said on Monday.

–Elpida Memory Inc (6665.T: )

Japanese PC memory maker Elpida will start talks on capital tie-ups with two Taiwanese chipmakers as it tries to compete with industry leader Samsung (005930.KS: ), the Yomiuri daily reported on Saturday.

–Toshiba Corp (6502.T: )

Toshiba will overhaul its chip operations, outsourcing output of some system chips to Samsung Electronics (005930.KS: ) and selling a production line to Sony Corp (6758.T: ), as it reduces its non-memory chip exposure.

–Itochu Corp (8001.T: ), Sumitomo Corp (8053.T: ), Marubeni Corp (8002.T: ), Sojitz Corp (2768.T: )

The firms will jointly bid for rights to a large Mongolian coal mine, along with a South Korean consortium and a state-owned Russian company, the Nikkei business daily said on Saturday.

–Mitsui & Co (8031.T: )

Mitsui and Chinese partner Shenhua Group Corp (601088.SS: ) (1088.HK: ) are also discussing a joint bid with U.S. coal giant Peabody Energy (BTU.N: ) for rights to the same Mongolian coal mine, making it the second and only other group, the Nikkei daily said on Saturday.

–Chiyoda Corp (6366.T: )

Chiyoda aims to boost new energy businesses to 15-20 percent of sales within three to four years, from a few percent currently, as it tries to strengthen its environment-oriented operations, Chiyoda President and CEO Takashi Kubota told Reuters in an interview on Friday.

–Fujitsu Ltd (6702.T: )

Japan’s leading IT vendor, will invest more than $1.2 billion in cloud computing services next financial year, its president said Friday.

–Marubeni Corp (8002.T: )

Marubeni and its partners have decided to invest $200 million to double annual output at Australia’s Lake Vermont coal mine to 8 million tonnes from 2014, Marubeni said on Friday.

–JX Nippon Oil & Energy Corp (5020.T: )

JX Nippon and two trading companies will join forces to form Japan’s largest importer of liquefied petroleum gas, the companies said on Friday.

(Reporting by Antoni Slodkowski; Editing by Chris Gallagher)

Nikkei seen rangebound after China rate hike