Japan Nikkei extends gain for seventh session

Headline indices of the Japan share market inclined for seventh session on Tuesday, 25 September 2018, helped by yen depreciation to upper 112 level against greenback, with shares in chip equipment makers being notable gainers. However, market gains were limited amid an escalation in Sino-U.S. trade tensions and ahead of the outcome of U.S.-Japan trade talks scheduled later today. The 225-issue Nikkei average was up 0.3%, or 70.33 points, at 23,940.26. The Topix index of all first-section issues was up 1.02%, or 18.42 points, at 1,822.44. Japan share market closed on Monday for national holiday.

China and the United States imposed new tariffs on each other's goods on Monday and neither side looks to be in the mood to compromise, raising the risk of a protracted battle that could chill investment and disrupt global trade. The tense backdrop added to the general caution ahead of an expected interest rate hike by the Federal Reserve this week. The Fed begins its two-day policy meeting later on Tuesday.

Japan and the United States postponed their second round of trade talks in New York to Tuesday from Monday, amid concerns in Tokyo that it would face greater pressure to reduce the bilateral trade imbalance. U.S. Trade Representative Robert Lighthizer and Economy Minister Toshimitsu Motegi were scheduled to meet on Monday evening, ahead of a Wednesday summit between U.S. President Donald Trump and Japanese Prime Minister Shinzo Abe, on the sidelines of a U.N. General Assembly meeting.

Shares of semiconductor-related issues moved higher after their U.S. peers fared well overnight. Tokyo Electron grew 2.42 percent, Advantest 3.45 percent and Shin-Etsu Chemical 2.76 percent.

Shares in the energy issue were up, thanks to strength in crude oil prices. Crude oil experienced a solid rise in overnight trade, hitting four year highs in the process as sanctions look to impact Iranian oil exports and constraints to Venezuelan output. Major gainers included Cosmo Energy, Idemitsu and Showa Shell.

Shares of machinery companies which rely on China demand declined as China and the United States imposed a new round of tariffs on each other's goods on Monday, which is expected to hit global growth. Construction equipment makers Komatsu shed 2% and Hitachi Construction Machinery declined 2.7%. Electrical equipment maker Yaskawa Electric tumbled 5.9%

Mazda Motor dropped more than 2% after the automaker said on Friday that it has suffered 28 billion yen impact from a loss of production due to western Japan rains in July.

In economic news, members of the Bank of Japan's monetary policy meeting said that Japan's economic expansion is continuing at an acceptable pace, minutes from the bank's meeting on July 30 and 31 has revealed. At the meeting, the central bank retained its massive monetary stimulus as expected, including the -0.1% interest rate on current accounts that financial institutions maintain at the bank.

Japan Producer Prices Up 1.3% On Year In August-- Japan producer prices were up 1.3% on year in August, the Bank of Japan said on Tuesday - exceeding expectations for an increase of 1.1%, which would have been unchanged from the July reading. On a monthly basis, producer prices were unchanged after rising 0.1% in the previous month.

CURRENCY NEWS: Japanese yen depreciated against greenback and other major currencies on Tuesday. The U.S. dollar was trading in the upper 112 yen-range on Tuesday.

OFFSHORE MARKET NEWS, US stock market closed mostly lower on Monday, after China canceled trade talks with the U.S. and as investors looked ahead to Wednesday's Federal Reserve meeting.. The Dow Jones Industrial Average shed 181.45 points or 0.68% to finish at 26,562.05 and the S&P fell 10.30 points or 0.35% to 2,919.37, while the Nasdaq added 6.29 points or 0.08% to 7,993.25.

The major European markets ended softer on Monday. The DAX of Germany dropped 0.64%, the CAC of France fell 0.33% and the FTSE 100 of the U.K. declined 0.42%.

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