Japan Nikkei falls on US-China trade deal optimism

Headline indices of the Japan share market closed at 10-week high on Monday, 25 February 2019, as investor sentiments bolstered amid trade optimism after U.S. President Donald Trump announced a postponement of a closely-watched deadline on March 1, in the latest sign of progress in bilateral trade talks. Total 32 out of 33 issues of the TOPIX Sector indices inclined, with shares in Pulp & Paper, Electric Appliances, Securities & Commodities Futures, Glass & Ceramics Products, Nonferrous Metals, and Insurance issues being notable gainers. At closing bell, the 225-issue Nikkei Stock Average advanced 102.72 points, or 0.48%, at 21,528.23. The broader Topix index of all First Section issues on the Tokyo Stock Exchange added 11.35 points, or 0.71%, higher at 1,620.87.

Markets globally took note of Trump's latest announcement, adding to earlier gains at the end of last week on signs of progress in trade talks between the United States and China. Mr Trump on Sunday tweeted that there was "substantial progress" in trade talks and he would push back the March 1 deadline for higher tariffs, and looked forward to a meeting with Chinese President Xi Jinping to seal a deal.

Trump had planned to raise tariffs to 25% from 10% on $200 billion worth of Chinese imports if a deal between the world's two largest economies was not reached by March 1. Trump said progress had been made on a host of divisive areas including intellectual property protection, technology transfers, agriculture, services and currency.

Shares of companies with high exposure to the Chinese market attracted strong demand, with Keyence Corp surging 4.3%, Yaskawa Electric adding 2.7% and Komatsu Ltd 0.9% higher.

Nintendo Co advanced 1% after the company said it will buy back up to 1 million of its own shares, or 0.83% of shares outstanding, worth up to 33 billion yen ($298.35 million).

Envipro Holdings shares jumped to its daily limit of 675 yen, a 17.4% increase, after saying it will launch a recycling business of secondary lithium-ion batteries. It said it will step up efforts to collect rare metals such as nickel and cobalt from used secondary batteries.

ECONOMIC NEWS: Japan producer prices were up 1.1% on year in January, the Bank of Japan said on Monday, unchanged from the previous month. On a monthly basis, producer prices sank 0.5% after sliding 0.1% in December. Among the individual components, prices were up for advertising, employment, accounting and architectural services. Prices were down for software development, air freight, communication, information and transportation services.

CURRENCY NEWS: The Japanese yen depreciated in the upper 110 yen zone against the greenback on Monday, as demand for safe heaven units dimmed on news of apparent progress in trade talks between China and the US. The dollar was quoted at 110.78-79 yen compared with 110.63-73 yen in New York and 110.74-75 yen on Friday in Tokyo. The euro, meanwhile, fetched 125.63-67 yen against 125.33-43 yen in New York and 125.65-69 yen in Friday trade in Tokyo.

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