Japan’s Nikkei share average was flat in choppy trade on Monday morning after profit-taking in cyclical stocks offset gains in drugmakers which had raised their earnings outlooks.
The Nikkei was flat at 17,178.97 in midmorning trade after opening a tad higher.
The Nikkei has been trading above the psychologically important 17,000-line, but could struggle to make further gains without fresh catalysts, traders said.
Over the past week, the Nikkei benchmark index surged 1.9 percent.
“There are few investors who want to chase the market higher until they see more news from overseas especially regarding a U.S. rate hike,” said Yutaka Miura, senior technical analyst at Mizuho Securities.
The dollar was up 0.1 percent at 104.00 yen buoyed by expectations that the U.S. Federal Reserve will raise interest rates this year.
A U.S. rate hike on the back of the recovering U.S. economy would mean more export demand to the U.S. from Japan, while exporters stocks benefit from a stronger dollar against the yen on hopes that their profits made overseas will rise when repatriated.
Mining stocks were the worst performers, with Inpex Corp falling 2.0 percent and Japan Petroleum Exploration Co dropping 2.4 percent.
Oil prices fell early on Monday as Iraq said it wanted to be exempted from any OPEC agreement to cut crude production, and as U.S. drillers stepped up work.
Cyclical stocks like banks and exporters underperformed after their recent gains.
Mitsubishi UFJ Financial Group shed 1.0 percent and Mizuho Financial Group declined 0.5 percent .
Although the dollar stood tall against the yen, exporters languished after they rose in the past few week. Honda Motor Co dropped 0.7 percent and Panasonic Corp declined 0.6 percent.
Drugmakers staged rallies after raising their earnings outlooks. Sumitomo Dainippon Pharma gained 1.0 percent after it raised net profit outlook to 10.9 billion yen from 8 billion yen for the April-Sept period.
Kobayashi Pharmaceutical Co rose 1.0 percent after it raised operating profit forecast to 11.8 billion yen from 10.6 billion yen.
The broader Topix dropped 0.1 percent to 1,363.61 and the JPX-Nikkei Index 400 declined 0.1 percent to 12,219.63.