Japan shares rebound as lower oil prices lift sentiment

Japanese stocks closed higher on Monday, recovering part of the previous session's losses as a sharp drop in oil prices improved investor sentiment. The Nikkei 225 Index rose 0.5% to 64,931, while the broader Topix Index gained 1.37% to 4,066.

Markets were supported after the US refrained from launching an attack on Iran over the weekend, while Tehran also paused its retaliatory operations. The easing of geopolitical tensions pushed oil prices lower, which was positive for Japan as the country relies heavily on oil imports from the Middle East.

On the domestic front, investor sentiment remained cautious as Prime Minister Sanae Takaichi's approval ratings slipped. The government's efforts to reduce the impact of inflation have yet to meet household expectations, adding to concerns about the domestic economic outlook.

Among individual stocks, Mitsubishi UFJ rose 1.2%, SUMCO Corp gained 3.8%, Nintendo jumped 6.6%, Toyota Motor advanced 2.4%, and Fast Retailing added 1.5%. However, technology stocks broadly underperformed after a selloff in US tech shares on Friday, driven by growing concerns over heavy spending on artificial intelligence.

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