Japan Market edges up ahead of Japan-U.S. trade talks

Headline indices of the Japan share market closed higher on Monday, 27 May 2019, as investor sentiment was lifted by tracking gains on Wall Street on the final trading day of last week. However. Market gains were capped on caution ahead of the outcome of trade talks between the leaders of Japan and United States later on the day. At closing bell, the 225-issue Nikkei Stock Average advanced 0.33%, or 69.90 points, to 21,187.12, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange was up 0.4%, or 6.14 points, at 1,547.35.

Total 23 issues of 33 subsectors of the Tokyo Stock Exchange inclined, with shares in Mining, Electric Power & Gas, Oil & Coal Products, Pharmaceutical, and Air Transportation issues being notable gainers, whereas Fishery, Agriculture & Forestry, Pulp & Paper, Textiles & Apparels, and Foods were notable losers.

The market awaited the outcome of trade talks between the leaders of Japan and United States. On Monday, President Donald Trump and Prime Minister Shinzo Abe will hold formal talks. A joint news conference will be held later in the global day.

The market focus is on tariffs on autos after Trump has threatened to target Japanese automakers with high tariffs in his effort to cut trade surpluses with other countries, while they are optimistic about the developments after Trump tweeted about a progress in the Japan-U.S. talks. The president Trump said Tokyo and Washington were getting close to a deal that would address the U.S. trade deficit. The U.S. had a deficit of $56.8 billion in goods and services with Japan in 2018.

Shares of exporters were higher. Sony Corp rose 0.9%, Subaru Corp gained 1.8% and Hitachi Ltd soared 1.7%. Fast Retailing and SoftBank Group Corp advanced on Monday, up 1.1% and 1.8%, respectively.

ECONOMIC NEWS: The Japanese government lowered its economic assessment citing weak exports and industrial production, according to the monthly report released by the Cabinet Office. Nonetheless, the government said the Japanese economy is recovering at a moderate pace. Downgrading the assessment of industrial production, the office said, "Industrial production is in a weak tone recently." The government also lowered its view on business investment. The report said business investment is on the increase at a moderate pace, while weakness is seen recently in machinery investment. Amid escalating US-China trade disputes, the cabinet office said exports are in a weak tone. The office added that looking ahead to the consumption tax rate hike planned for October 1, 2019, the government will take all possible measures towards economic and fiscal management.

CURRENCY NEWS: The Japanese yen depreciated in the mid-109 range against greenback in afternoon deals in Tokyo on Monday. The dollar was quoted at 109.39-40 yen, compared with 109.25-35 yen in New York and 109.53-54 yen on Friday in Tokyo.

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